Gold prices surged above the $2,000 per troy ounce mark on Friday,

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Gold spot surpassed the $2,000 milestone on Thursday, marking their first ascent to this level in two months. On Thursday, gold prices rebounded, driven by escalating tensions in the Middle East and concerns over the increasing U.S. national debt, which led investors to seek refuge in safe-haven assets. Notably, the price of gold futures climbed to $2,003 per troy ounce on that day, breaking the $2,000 barrier for the second time in a week and setting a course towards the $2,089 level – a height last seen in August 2020.

Gold prices surged above the $2,000 per troy ounce mark on Friday

driven by escalating geopolitical risks stemming from the ongoing conflict between Israel and Hamas in the Middle East. Israel’s military operations in Gaza have heightened concerns about the conflict spreading to other countries in the region, contributing to the rise in gold prices.

Notably, this resurgence occurred despite a concurrent surge in 10-year Treasury yields, defying the typical inverse relationship between the two. The yield on the 10-year Treasury note surpassed the 5% threshold earlier in the week, marking the first time it had done so in 16 years. This rise in yields somewhat offset the positive earnings reported by major tech companies during the week.

More to come?

Following a conflict that claimed thousands of lives, the situation could escalate further if Israel carries out its previous pledge to launch a full-scale ground invasion of the Gaza Strip. Geopolitical risks like these, due to their rarity, tend to drive up the prices of safe-haven assets such as gold. A similar surge in gold prices occurred when Russia invaded Ukraine, reaching as high as $2,078.

The other factor influencing gold prices is the current fiscal situation in the United States, with the national debt reaching a record high of over $33 trillion. This uptick in gold’s appeal coincides with increased Treasury bond issuance following Congress’s decision to raise the country’s debt ceiling, impacting the supply-demand dynamics.

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