Gold Prices Skyrocket Triggered by Israeli-Palestinian Attacks

Gold prices rose amid the Israeli and Palestinian conflict. However, US economic data is still an obstacle because the Fed's interest rate policy has a high impact on gold.

Gold prices rose in the trading session Monday (09/October) afternoon. Spot gold jumped 1% to $1849.51 per ounce, and gold futures prices rose 1.1% to $1863.70. The following chart of XAU/USD shows a 0.89% rise to $1848.93, its highest level in one week.

The increase in gold prices was triggered by the Israeli and Palestinian conflict. Israel shelled Palestinian residential areas in Gaza last Saturday, after stating that Hamas carried out the attack first. Victims reached more than 1000 people, including civilians.

Geopolitical tensions in the Middle East have the potential to give rise to a new major war in the region, thereby reviving gold's function as a safe haven. Investors carry out risk-aversion by buying safe assets such as gold, Japanese Yen and US Dollars.

"Gold has regained safe haven status following the geopolitical conflict at the end of last week," said City Index analyst Matt Simpson. "We see the potential for gold to head towards $1880. But if there is no significant decline in bond yields, then I doubt (gold) can break $1900 in the near term."

Gold bullishness still hit by US data

The increase in gold prices is still overshadowed by the US economic achievements. Last Friday, US employment data was reported positive. US September Non Farm Payroll (NFP) increased by 336K, higher than 227K and 170k forecast. Gold prices fell for some time after the report was published, before finally strengthening due to market concerns about the Israeli-Palestinian conflict.

Analyst Ole Hansen from Saxo Bank acknowledged that it would be difficult for gold prices to maintain the rally. However, he is still optimistic about gold prices in the long term. "We will patiently maintain a bullish view on gold. A fresh push to the upside depends heavily on US economic data, and we wait for the FOMC (Federal Open Market Committee) to shift its focus from rate hikes to rate cuts," Hansen said.