Gold prices took a sharp downturn on Monday, dropping 2% as fears of a potential conflict in the Middle East eased, prompting investors to shift their focus towards riskier assets. Spot gold was trading at $2,354.61 per ounce, while U.S. gold futures fell to $2,357.00, reflecting the general sentiment in the market.
Ricardo Evangelista, a senior analyst at ActivTrades, noted that concerns about escalating tensions between Iran and Israel had subsided, leading to a decrease in safe-haven buying of gold. Tehran downplayed Israel’s recent drone strike, suggesting a desire to prevent further escalation in the region.
The precious metal had reached a near-record high of $2,417.59 per ounce in the previous session, as investors sought refuge amidst geopolitical uncertainties. However, with equities rebounding and oil prices declining, investors appeared to be moving away from safe-haven assets.
Looking ahead, the upcoming U.S. personal consumption expenditures (PCE) report could confirm fears of persistent inflation, potentially delaying interest rate cuts. This outlook could further dampen the appeal of gold as an investment option.
In addition to gold, silver also experienced a significant drop of 4% to $27.51 per ounce, while platinum and palladium prices declined by 1.1% and 2.2%, respectively. Analysts at Heraeus Metals highlighted concerns about platinum autocatalyst demand, especially amidst slowing growth in Europe.
Overall, the shift in investor sentiment towards riskier assets and the potential impact of inflation data on interest rates are likely to influence the future direction of precious metal prices.
