Gold little moved ahead of key events

Gold prices struggled to maintain their grip above the coveted $2,000 mark on Monday, retreating after briefly touching $2,010 during the Asian trading session – the highest level recorded since mid-May. The decline in gold’s value was attributed to diminished demand for both the precious metal and the US Dollar, as market participants shifted their focus toward upcoming key economic events.

Israel’s ground offensive in the Gaza Strip has also added geopolitical tension to the mix, with investors closely monitoring the situation while awaiting crucial announcements from central banks later in the week. The Federal Reserve is set to disclose its monetary policy decision on Wednesday, alongside the Bank of Japan and the Bank of England.

Amid these uncertainties, the ongoing conflict between Israel and Hamas triggered notable market movements. Hedge funds, in response, started exiting their short positions in the gold market. Recent data from the Commodity Futures Trading Commission (CFTC) revealed that some of these funds were not just closing shorts but also entering new bullish positions.

According to the CFTC’s disaggregated Commitments of Traders report for the week ending October 24, money managers significantly increased their speculative gross long positions in Comex gold futures by 17,748 contracts, bringing the total to 122,456. Simultaneously, short positions fell by 22,897 contracts to 66,708. This shift resulted in a net bullish position of 55,748 contracts, a testament to the changing sentiment in the gold market.

Analysts say this renewed interest in gold to the market’s anticipation of the Federal Reserve maintaining its restrictive interest rates well into 2024. Despite concerns about U.S. monetary policy, the dominant factor driving gold prices remains safe-haven demand.

At 18,45 GMT spot gold is currently trading at $1997.79.