Gold Rises to 11-Week High as Middle East Conflict Escalates

(Bloomberg) — Gold jumped to the highest level since the beginning of August as the intensifying conflict in the Middle East bolstered haven demand, with hopes for a diplomatic resolution deteriorating after a deadly explosion in Gaza.

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US President Joe Biden’s visit to Israel and Jordan scheduled for Wednesday began to unravel even before he left the ground, after the explosion at a Gaza hospital a day earlier left hundreds dead and Arab leaders pulled out of a meeting planned for the trip.

Even before the explosion, officials in the US and the region were increasingly worried they wouldn’t be able to keep the conflict from spreading should Israel go ahead with a ground invasion. Biden has already sent two aircraft carriers to the region and put troops on alert to send a message of deterrence to Iran and its ally Hezbollah, whose thousands of missiles could pose a severe threat to Israel.

Iran’s foreign minister called for a full and immediate boycott of Israel by Muslim countries, and an oil embargo against the country, following the hospital explosion. Shortly after arriving in Tel Aviv, Biden suggested Israel was not responsible for the blast.

The threat of escalation continues to provide support for bullion, which has gained since Hamas’s surprise attack on Israel earlier this month. Previously, the metal was trading near a seven-month low, with a steep selloff in Treasuries weighing heavily on the non-yielding asset.

Spot gold climbed 1.8% to $1,957.63 an ounce as of 10:20 a.m. in New York, after touching $1,962.64, the highest since Aug. 1.

The Bloomberg Dollar Spot Index was steady. Silver gained, while platinum and palladium slid.

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