Gold slid on Monday, pressured by technical selling, following a fierce 3% rally in the previous session as raging Israel-Hamas war sent investors scuttling to the safe-haven bullion and pushed prices above the key $1,900 ceiling.
Spot gold fell 0.7% to $1,919.21 per ounce by 0423 GMT and US gold futures dropped 0.5% to $1,932.70.
Gold, which investors view as a safe place to park money during times of economic and geopolitical stress, hit its highest since Sept. 20 at $1,934.82 earlier in the session, after surging 3.4% on Friday in its biggest one-day rise in seven months.
“We saw an extreme move to the upside on Friday, and such moves usually beckon some mean reversion,” City Index Senior Analyst Matt Simpson said.
“Given the surge in prices, gold will likely remain in focus for traders seeking to buy dips, which makes $1,920 and $1,900 of area of interest.
But if tensions in the Middle East continue to escalate, shorting gold may not end too well for bears over the near-term.
Gold is expected to retest resistance of $1,933 per ounce, a break above could open the way towards $1,953, according to Reuters technical analyst Wang Tao.
Gold price per tola increases Rs4,900 in Pakistan
Data on Friday showed that COMEX gold speculators increased net short position by 11,784 contracts to 14,788 in week ended Oct. 10.
US President Joe Biden said on Sunday he believes the Hamas militant group must be eliminated as top US officials warned the war between Israel and Hamas could escalate.
The Israeli-Hamas war has sharpened focus on rising geopolitical risks for financial markets, as investors wait to see if the conflict draws in other countries with the potential to drive up oil prices further and deal a fresh blow to the world economy.
Investors have one eye on the Middle-East developments while another on the US monetary policy as they look forward to Federal Reserve Chair Jerome Powell’s speech later this week.
Elsewhere, spot silver rose 0.1% to $22.71 per ounce, platinum was steady at $881.04 , while palladium was up 0.4% to $1,152.26.
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