Gold retreats as Middle East tensions ebb

GOLD PRICES dipped on Monday, as easing fears of a wider Middle East conflict lowered bullion’s safe-haven appeal, while market participants awaited a key US inflation reading due later this week for interest rate cues.

Spot gold fell 0.9% to $2,369.97 per ounce, as of 0451 GMT. US gold futures fell 1.2% to $2,383.80.

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

Gold slipped on Monday after rising 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.

Asian stocks recovered some losses and bond yields rose as fears of a wider Middle East conflict ebbed, with investors gravitating back towards riskier assets.

Benchmark 10-year US Treasury yields edged up and were last at 4.6599%, making non-yielding bullion less attractive.

Nevertheless, Kelvin Wong, a senior market analyst for Asia Pacific at OANDA 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.

Higher interest rates increase the opportunity cost of holding non-yielding bullion. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, is due on Friday.

Among other precious metals, spot silver fell 2.3% to $27.99 per ounce; spot platinum rose 0.3% to $934.03; and palladium fell 0.3% to $1,023.17. —