Gold Prices Decline Amid Easing Middle East Tensions
Gold Demand Eases as Iran-Israel Fears Wane
Gold prices in Asian trading witnessed a decline on Monday, influenced by diminishing concerns about an escalation of conflict in the Middle East, thereby reducing safe-haven demand for the precious metal. Spot gold dropped by 0.9% to $2,370.45 per ounce, while gold futures expiring in June fell by 1.2% to $2,384.05 per ounce by 00:48 ET (04:48 GMT).
The recent surge in gold prices, surpassing $2,400 an ounce, was fueled by heightened tensions between Iran and Israel, marked by mutual strikes. However, Iran's apparent downplaying of the impact of an Israeli strike on Friday, coupled with the absence of immediate retaliation plans, instilled hope that the conflict may not escalate further. Consequently, safe-haven demand for gold diminished.
Nonetheless, reports emerged on Monday of strikes against a U.S. military base in Syria by forces in Iraq, alongside ongoing Israeli offensives against Gaza. These developments sustained geopolitical tensions in the Middle East, particularly amid the failure of Israel and Hamas to reach a ceasefire agreement.
US Rate Fears Continue to Weigh on Gold
Amidst a backdrop of steady inflation readings for March and hawkish signals from Federal Reserve officials, the U.S. dollar stabilized near five-month highs, while U.S. Treasury yields surged. The prevailing sentiment among traders regarding higher-for-longer interest rates contributed to the dampening of gold prices. Elevated interest rates increase the opportunity cost of holding non-yielding assets like gold, thus exerting downward pressure on its prices.
Furthermore, gold had recently entered overbought territory, rendering it susceptible to profit-taking amid the prospect of sustained interest rates.
Other Precious Metals Follow Suit
In tandem with gold, other precious metals also experienced declines on Monday. Platinum futures saw a marginal decrease to $943.80 per ounce, while silver futures slid by 2.8% to $28.038 per ounce.
Copper and Aluminum Prices Reach New Highs
Conversely, copper and aluminum prices edged higher on Monday, reaching new peaks for 2024 due to concerns over tightened supply dynamics. Stricter sanctions on Russian metal exports contributed to the expectation of reduced supplies, thus bolstering prices.
Three-month copper futures on the London Metal Exchange rose by 0.3% to $9,919.50 per ton, while one-month copper futures increased by 0.4% to $4.5105 per pound, both reaching two-year highs. Aluminum futures climbed by 0.2% to $2,671.0 per ton, marking their highest level since June 2022.
