Gold Prices Drop, Markets Monitor Israel-Hamas War Spillover

Gold prices declined on Monday after robust demand for the yellow metal led to significant gains the previous week, with investors keeping an eye on the prospect of the Israel-Hamas war spreading to other nations.

Spot gold dropped 1.09% to $1,911.81 per ounce, while December contract gold futures shed 0.89% to $1,924.25 per ounce.

The safe-haven metal rose more than 5% last week as the fighting between Israel and the Palestinian militant group Hamas prompted market players to take a more defensive approach.

Investors are now assessing the possibility of a spillover of the conflict into the Middle East, with a ground invasion of Gaza by Israel looming.

US consumer price index (CPI) increasing to 3.7% year-over-year in September signaled an extended period of higher interest rates from the Federal Reserve.

The outlook has weighed on gold prices since 2022, and with the central bank likely to remain hawkish with the rates, any major upside in the yellow metal is expected to be curbed.

Gold has significantly climbed due to solid demand, although the US dollar remained the top choice for safe haven. In the prior week, inflows to the greenback neared a ten-month high.

Copper Recovers, Investors Await China GDP Data Release

In the industrial metals space, copper prices traded higher on Monday, recovering from an almost five-month low last week.

Copper futures for December delivery gained 0.30% to $3.58 per pound.

Investors’ attention this week will turn to economic data from China, a major importer of the red metal, mainly the country’s gross domestic product (GDP) for the third quarter.

China’s GDP data will be released on October 18, which is estimated at a 4.4% growth, marking a significant fall from the second quarter’s 6.3%.

Analysts forecast a slump for the world’s second-largest economy as business activity falters despite Beijing introducing a set of stimulus measures to bolster economic performance.

The notion presents an unfavorable situation for Chinese copper demand and may further drag prices of the red metal in the coming weeks. Over the past year, concerns about China’s economy have become a major weakness for copper.

The People’s Bank of China (PBOC) is also set to announce its decision regarding key lending rates, with markets expecting to see the rates steady.