Gold rises over 1% on safe-haven demand

By Rahul Paswan

(Reuters) – Gold prices rose more than 1 percent on Monday, hitting their highest level since August 2, boosted by inflows into safe haven assets as traders awaited U.S. inflation data this week that could shed more light on the Federal Reserve's interest rate-cutting path.

Spot gold rose 1.5% to $2,468.25 an ounce at 18:18 GMT. US gold futures closed 1.2% higher at $2,504.

“What we're seeing in the gold and silver markets today is some price support from bullish gold charts leading to some technical buying,” said Jim Wycoff, senior analyst at Kitco Metals.

“You can also see some demand for safe havens due to increased tensions in the Middle East,” Wycoff said.

On Monday, Israeli forces continued operations near the southern Gaza city of Khan Younis. The international community is pushing for an agreement to end fighting in Gaza and prevent a drift into a larger regional conflict with Iran and its proxies.

Meanwhile, Ukrainian forces broke through the Russian border last Tuesday and crossed large parts of the western part of Russia's Kursk region. This surprise attack exposed the weakness of Russia's border defenses in the area.

Investors will also be looking to US producer price data on Tuesday and consumer price figures on Wednesday for more clarity on inflation.

Fed Governor Michelle Bowman softened her usually aggressive tone on Saturday, pointing to further “welcome” progress on inflation in recent months.

According to CME Group's FedWatch tool, markets are pricing in a 49 percent probability that the Fed will cut its benchmark interest rate by 50 basis points in September.

Gold bars are seen as a hedge against geopolitical and economic uncertainties and tend to thrive in a low interest rate environment.

“However you look at it, gold is currently a well-traded commodity. Wall Street is unanimously optimistic, but macro funds' positioning may now be exhausted without the threat of a recession,” TD Securities said in a statement.

The spot price of silver rose 1.8% to $27.94 an ounce, platinum gained 2.2% to $942.20 and palladium was about 1.7% higher at $919.36.

(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Kevin Liffey, Alison Williams and Shreya Biswas)