Investing.com– Gold prices fell slightly on Monday, but remained above the key $2,000 level as uncertainty over the Israel-Hamas war kept safe haven demand elevated before a Federal Reserve meeting this week.
The yellow metal hit a 5-½ month high last week as continued uncertainty over the Middle Eastern conflict kept investors biased towards traditional safe havens. Israel had over the weekend launched a ground assault on Gaza, with markets waiting to see if any other Arab powers would join the conflict.
But further gains in gold were somewhat held back by a stronger , as markets positioned for a this week. The greenback firmed slightly on Monday, as did Treasury yields.
fell 0.2% to $2,002.22 an ounce, while expiring in December steadied at $2,011.70 an ounce by 00:22 ET (04:22 GMT). Both instruments remained close to their highest level since mid-May.
Fed meeting, data deluge awaited
Markets were now focused squarely on the conclusion of a two-day Fed meeting on Wednesday, where the central bank is widely expected to keep interest rates on hold.
But traders expect the Fed to reiterate its stance on higher-for-longer rates, especially as recent data showed that inflation had picked up again, while economic growth remained resilient.
Fed officials have still left the door open for at least one more rate hike this year. data, due on Friday, is expected to factor into this outlook. Strength in the U.S. economy also gives the Fed more headroom to keep rates higher.
Higher rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal. This notion had battered gold prices over the past year, as global interest rates rose.
Rate decisions from the and are also due this week.
Copper rises on China PMI hopes
Among industrial metals, copper prices rose slightly on Monday in anticipation of key economic data from China this week.
rose 0.3% to $3.6508 a pound, and were close to a three-week high.
Chinese data is due on Tuesday, and is expected to show more improvement in in the world’s largest copper importer.
But gains in copper are still likely to be limited, as anticipation of the Fed meeting keeps risk appetite weak.