Gold hovers above $2000 mark as Middle East war boosts safety rush

Gold prices hovered atop the key $2,000 level on Monday as an escalating Middle East conflict kept the safe-haven metal increasingly in demand among investors as they now gear up for the U.S. Federal Reserve policy's meeting this week.

FUNDAMENTALS

* Spot gold edged 0.1% lower to $2,003.18 per ounce by 0119 GMT. U.S. gold futures climbed 0.8% to $2,013.40.


* Gold prices hit $2,009.29 an ounce on Friday, surpassing the key psychological $2,000 level for the first time since mid-May, as investors piled into safe-haven bullion on fears of a global economic fallout from the Israel-Hamas conflict.

* Palestinians in northern Gaza reported fierce air and artillery strikes early on Monday as Israeli troops backed by tanks pressed into the enclave with a ground assault.

* U.S. consumer spending surged, while monthly inflation remained warm in September, the Commerce Department reported on Friday.

* High inflation will dog the world economy next year, with three-quarters of over 200 economists polled by Reuters saying the main risk is that it turns out higher than they forecast, suggesting interest rates will also remain higher for longer.

* COMEX gold speculators raised their net long position by 48,815 contracts to 90,682 in week ended Oct. 24, CFTC data showed on Friday. [CFTC/]

* Swiss precious metals refinery Valcambi has resigned from the Swiss Association of Precious Metal Manufacturers and Traders (ASFCMP) after 40 years of membership.

* Purchases of physical gold during a major festival in India improved last week, albeit at a slower pace compared with last year, as domestic prices were sitting at near-record highs, while top consumer China saw premiums easing further. [GOL/AS]

* Spot silver eased 0.3% to $23.07, platinum fell 0.3% to $900.74 and palladium was steady at$1,121.88.

DATA/EVENTS (GMT)

1000 EU Consumer Confid. Final Oct

1300 Germany CPI Prelim YY Oct

1300 Germany HICP Prelim YY Oct

Bank of Japan holds a monetary policy meeting to Oct. 31