Gold falls again after biggest daily slump in almost two years
Gold extended losses after its biggest daily decline in almost two years, as investors focused on easing Middle East tensions and signs the Federal Reserve will keep rates higher for longer.
After climbing to a record earlier this month, the precious metal fell below $2,300 an ounce. Bullion slumped 2.7% on Monday as concerns the conflict between Israel and Iran would escalate faded. Tehran played down the impact and significance of Tel Aviv’s recent strike, saying that Israel has received the “necessary response at this stage.”
“There is likely to have been some tactical short-selling, given the recent surge in gold prices,” Richard Grace, a senior currency analyst and international economist at ITC Markets, said in a note.
Bullion is still up about 15% since the middle of February, with gains supported by geopolitical risks, central bank buying and demand from Chinese consumers. The precious metal has risen despite advances in the dollar and Treasury yields on signs the Fed will delay its much-anticipated pivot.
Traders are now turning
Bullion slumped 2.7% on Monday as concerns faded about an escalation in the conflict between Israel and Iran
their attention to US economic data due this week, including the Fed’s preferred measure of inflation, which may give more clues on the path for monetary policy. Policymakers have turned increasingly hawkish on the outlook for rates in recent weeks following a series of strong inflation reports.
With markets continuing to temper expectations for monetary easing this year, a higher-forlonger rate environment may weigh on non-interest bearing gold.
Spot gold dropped 1.2% to $2,298.67 an ounce at 11:10 a.m. in London. The Bloomberg Dollar Spot Index was flat.
Silver declined, after tumbling 5.2% in the previous session. Palladium and platinum also dropped.