Gold heads for biggest monthly rise since November on Middle East crisis

Bars of gold are seen at the Krastsvetmet company, one of the world's largest producers of precious metals in Moscow, Russia on January 31, 2023. 
Alexander Manzyuk | Anadolu Agency | Getty Images

Gold ticked higher on Tuesday and was on track for its biggest monthly rise since November last year as the Israel-Hamas war boosted safe-haven bets, but investors also cautiously awaited the U.S. Federal Reserve's policy meeting this week.

Spot gold rose 0.2% to $2,000.20 per ounce, having spiked as high as $2,009.29 on Friday. U.S. gold futures also rose 0.2% to $2,009.70.

Spot gold was at its lowest in seven months at $1,809.50 on Oct. 6, a day before Hamas' attack on Israel. It is now on track for an 8% rise in October as investors bolted for safety amid the Middle East crisis.

"The precious metal is likely to remain supported as long as the ongoing conflict threatens to spill over into the broader region and further sour the global economic outlook," said Exinity chief market analyst Han Tan.

Investors' focus this week is on the U.S. Treasury's refunding announcement and the Fed's monetary policy decision on Wednesday, followed by the U.S. monthly jobs report on Friday.

Fed Chair Jerome Powell is likely to stick to the old script of being data-dependent on the trajectory of the Fed funds rate, while keeping expectations alive for one last interest rate hike in December, said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.

The Bank of Japan further loosened its grip on long-term interest rates by tweaking its bond yield control policy again on Tuesday. The Bank of England's decision is due on Thursday.

Spot silver fell 0.4% to $23.22 and platinum was up 1% to $938.71, with both set for monthly gains. Palladium rose 0.2% to $1,130.37, eyeing a near-10% decline this month.