Gold sinks 2% as Middle East worries ebb

GOLD PRICES dropped more than 2% to a one-week low on Monday as worries over a wider Middle East conflict subsided, prompting investors to scale back safe-haven trades in favor of riskier assets like equities.

Spot gold was down 2.5% at $2,330.51 per ounce as of 1:52 p.m. ET (1752 GMT), and marked its biggest intraday fall in more than a year.

US gold futures settled 2.8% lower at $2,346.40.

“Some risk of an imminent retaliation in the Middle East has been removed, which has attracted some selling activity in gold. But the question is how much scope there is to the downside,” said Daniel Ghali, a commodity strategist at TD Securities.

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

Gold also came under pressure as Wall Street’s main indexes opened higher, cutting demand for the safe-haven and noninterest paying asset.

Geopolitical tensions coupled with robust central bank buying had driven gold to a record high of $2,431.29 on April 12.

Investors are now waiting for the release on Friday of the US personal consumption expenditures report for cues on the prospect of US interest rate cuts.

Chicago Federal Reserve President Austan Goolsbee on Friday said progress on bringing down inflation has “stalled” this year, becoming the latest official to drop an earlier focus on the coming need for rate cuts.

Spot silver slipped 5% to $27.22 an ounce, in its biggest daily decline in over three years. Platinum eased 0.9% to $923.55, and palladium shedded 1.3% to $1,013.25. —