Gold slid on Monday, pressured by technical selling, following a fierce 3% rally in the previous session, as the ongoing Israel-Hamas war sent investors scuttling to the safe-haven bullion and pushed prices above the key $1,900 ceiling.
Spot gold dipped 0.9% to $1,913.59 per ounce by 06:12 GMT, and US gold futures dropped 0.8% to $1,926.80.
Gold, viewed as a safe investment during uncertain times, hit its highest level since September 20 at $1,934.82 earlier in the session after surging 3.4% on Friday in its biggest one-day rise in seven months.
“We saw an extreme move to the upside on Friday, and such moves usually beckon some mean reversion,” City Index Senior Analyst Matt Simpson said.
“Given the surge in prices, gold will likely remain in focus for traders seeking to buy dips, with $1,920 and $1,900 being areas of interest. But if tensions in the Middle East continue to escalate, shorting gold may not end too well for bears over the near-term.”
Speculators, who turned net short on COMEX gold for the first time since November 2022 this month, increased their net short positions in the week ending October 10.
Investors are waiting to see if the conflict draws in other countries, which has the potential to drive up oil prices further and deal a fresh blow to the world economy.
“If the situation is more isolated than widespread, then some of this haven-demand could unwind,” said OCBC Executive Director and FX Strategist Christopher Wong.
Investors have one eye on the Middle East developments while keeping another on U.S. monetary policy as they look forward to Federal Reserve Chair Jerome Powell’s speech later this week.
Elsewhere, spot silver fell 0.7% to $22.55 per ounce, platinum was down 0.4% to $877.68, while palladium rose 0.3% to $1,151.19
