Gold prices hold near $2,000 amid central bank meetings and geopolitical jitters

The gold spot market continued its stable performance just below the significant $2,000 mark, trading at $1,997.37 on Tuesday morning. Traders are now looking ahead to the outcomes of central bank meetings scheduled for this week, with particular emphasis on the US Federal Reserve’s policy outlook.

Investors are also continuing to closely monitor developments in the Middle East as escalating tensions between Israel and Hamas have provided safe-haven support to gold prices, pushing bullion towards an 8% rise this month.

Hedge funds, in response, have 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.