(Bloomberg) -- Gold fell from above $2,000 an ounce — after breaching the threshold for the first time since May on Friday — as Israel’s ground invasion of Gaza appeared to be less extensive than some investors expected. 

Bullion slid after jumping 1.1% on Friday as Israel stepped up ground operations. Israel sent troops and tanks into the northern Gaza Strip in what it called the second and longer phase of its war against Hamas and is taking a day-by-day approach. 

That eased fears that a massive invasion would lead to a regional escalation. Hamas is designated a terrorist organization by the US and the European Union.

Gold has been one of the biggest winners since Hamas attacked Israel on Oct. 7, rising more than 9% as demand for haven assets strengthened. It’s likely to continue benefiting should tensions increase as investors up bets on a spillover into the wider region, which is crucial for global energy supplies. 

Gold is “consolidating and building a base for further gains, subject to geopolitics,” said Rhona O’Connell, an analyst at StoneX. “The hue and cry a couple of weeks ago when it bounced up as of Oct. 7 was in my view a bit overdone.”

The conflict has edged the US interest-rate path and Treasury yields as the main price driver for bullion. Still, rate decisions by major central banks — including the Federal Reserve — will be watched closely this week for the impact on borrowing costs.

Markets are also focused on the Treasury Department’s new borrowing plan, due hours ahead of the Fed’s interest-rate decision on Wednesday. The announcement will reveal the extent to which the Treasury will ramp up sales of longer-term debt to fund a widening budget deficit, with the selloff so far sending yields surging to the highest levels since before the global financial crisis. Higher yields are typically negative for non-interest bearing bullion.

Spot gold declined 0.5% to $1,997.32 an ounce as of 2:59 p.m. in London. The Bloomberg Dollar Spot Index weakened 0.3%. Silver and platinum rallied, while palladium was steady.

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