Gold prices fell on Monday, as fears of a widening conflict in the Middle East eased, reducing the metal’s safe-haven appeal, while market participants awaited key US inflation data due later this week for clues on interest rates.
The spot gold price fell by 0.9 percent to $2,369.97 per ounce, as of 04:51 (GMT). US gold futures fell by 1.2 percent to $2,383.80, according to Reuters.
Tehran downplayed the importance of the Israeli retaliatory drone strike against Iran, in what appears to be a move aimed at avoiding regional escalation.
Gold fell on Monday after rising to $2,417.59 in the previous session, a level not far from its record high of $2,431.29 reached on April 12.
“Right now, there is a lack of catalysts for gold prices to actually rise,” said Kelvin Wong, senior market analyst for Asia and the Pacific at OANDA. “It seems to us at this stage that the market now realizes the high cost of holding gold.”
Asian stocks recovered some of their losses and bond yields rose as fears of a wider conflict in the Middle East eased, with investors once again turning towards riskier assets.
US 10-year Treasury bond yields rose slightly and settled at 4.6599 percent, making non-yielding bullion less attractive.
However, Wong said the geopolitical risk premium remains positive in the medium to long term, as the conflict between Israel and Hamas lacks clarity or signs of a ceasefire.
Meanwhile, Chicago Fed President Austin Goolsbee said progress on lowering inflation has “stumbled” this year, echoing other Fed officials who believe interest rates will need to stay high longer to control pressures. Prices again.
Higher interest rates increase the opportunity cost of holding non-yielding gold.
The personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, is scheduled for release on Friday.
Among other precious metals, spot silver fell 2.3 percent to $27.99 an ounce, spot platinum rose 0.3 percent to $934.03, and palladium fell 0.3 percent to $1,023.17.