Gold slips over 1% as fears of wider Middle East conflict ebb

GOLD prices slipped more than 1% on Monday, as easing fears of a wider Middle East conflict lowered bullion’s safe-haven appeal, while market participants awaited a key U.S. inflation reading due later this week for interest rate cues.

Spot gold was down 1.4% at $2,357.19 per ounce, as of 0716 GMT. U.S. gold futures fell 1.8% to $2,371.00.

Tehran downplayed Israel’s retaliatory drone strike against Iran, in what appeared to be a move aimed at averting regional escalation.

Prices rose as high as $2,417.59 in the previous session, a level not far away from a record high of $2,431.29 hit on April 12.

“Right now, there is a lack of catalyst for gold prices to actually push up higher. At this juncture, it seems to us that the market is now coming to the realisation on the higher cost of holding gold,” said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

Asian stocks recovered some losses and bond yields rose, with investors gravitating back towards riskier assets.

Nevertheless, Wong said the geopolitical risk premium remained positive in the medium to long term as the conflict between Israel and Hamas lacked clarity or signs of ceasefire.

Meanwhile, progress on bringing down inflation has “stalled” this year, Chicago Federal Reserve President Austan Goolsbee said, echoing other Fed officials who believe that rates will need to stay high for longer to get price pressures under control again.

The personal consumption expenditures price index, the Fed’s preferred inflation gauge, is due on Friday.

“Despite increasing risk of a shallow and short-lived pullback before the end of second quarter, we expect gold and silver markets to break out higher in second half of 2024 to $2,500 per ounce and $30-32 per ounce,” Citi research wrote in a note.

Spot silver fell 3.2% to $27.72 per ounce, platinum lost 0.6% to $925.70, and palladium was down 1.7% at $1,008.62. – Reuters