Gold prices slid back sharply on October 16 on technical selling after a 3.4 percent rally in the prior session driven mainly by the Israel-Hamas war which ignited the yellow metal’s appeal as a “safe haven.”

Gold was down 0.7 percent at $1,919.21 per ounce on October 16.

During times of extreme geopolitical uncertainty, gold can act as a safe haven for investors.

If the fighting in the Middle East escalates further in the coming days, exacerbating uncertainty around the world, gold prices could rally again and could at some point test $2,000 per ounce, analysts said.

On the other hand, if the geopolitical situation stabilises to some degree, gold could pull back towards support around $1,900.

Furthermore, sentiment that U.S. monetary authorities could be at the end of their interest rate hiking cycle, has also underpinned gold prices.

If the markets were to expect U.S. rates to go higher, gold prices could lose ground as bullion bears no yield.

So the current situation in which U.S. rates could start easing in coming months, perhaps next year, can be constructive for gold prices.

“I am bullish on gold for the coming week,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told Kitco News.

“With the war drums pounding louder, precious metals may continue to attract renewed interest in their haven for capital role.”

For UK-based gold savers, a fall in the pound against the dollar that was linked to higher-than-expected U.S. inflation data, coupled with last week’s rally in gold prices in dollar terms, will make dollar-denominated bullion costlier to acquire.

This week’s data releases might offer clues as to what action the Bank of England may take when its policymakers meet in early November to set interest rates.

A “higher for longer” rates strategy by the Bank of England, could help sterling against the euro.

Persistently high inflation and all-time high wages growth because of a tight labour market, have complicated the Bank of England’s efforts to control inflation.

Analysts will focus this week on UK inflation and unemployment data, which could give an indication about the future trend of interest rates.

The UK still has the highest inflation of any G7 nation and next year is expected to have the slowest growth, according to projections from the International Monetary Fund.

Challenges to UK growth could help contain inflation, but higher energy prices have threatened to reignite price rises.