Gold prices experienced a decline in Asian trading on Tuesday, stepping back from record highs as a reduction in uncertainty surrounding Iran tempered safe-haven demand for the precious metal. Concurrently, persistent concerns regarding U.S. interest rates continued to exert pressure.
In the realm of industrial metals, copper’s rally to record highs reversed course on Tuesday amidst profit-taking activities and traders’ assessments of the red metal’s potential for the remainder of the year.
While gold surged to unprecedented levels on Monday, driven by heightened safe-haven demand following the tragic helicopter crash involving Iran’s President, the immediate repercussions of the event remained ambiguous.
Spot gold recorded a 0.5% decrease to $2,413.77 per ounce, while gold futures for June delivery witnessed a 0.9% decline to $2,416.75 per ounce by 00:59 ET (04:59 GMT), after reaching nearly $2,450 on Monday.
The dwindling safe-haven demand for gold in the absence of major instability in the Middle East left the metal vulnerable to apprehensions regarding U.S. interest rates. Federal Reserve officials cautioned on Monday that the central bank required further evidence of inflation easing before considering rate cuts, signaling a likelihood of prolonged high rates.
As markets geared up for the release of the Fed‘s late-April meeting minutes on Wednesday, the strengthened dollar exacerbated pressures on metal prices, truncating the recent rally.
High interest rates diminish the allure of non-yielding assets like gold, augmenting the opportunity cost of investing in them.
Additionally, other precious metals experienced declines on Tuesday, with platinum futures falling 1.6% to $1,042.60 per ounce and silver futures dropping 2.5% to $31.628 per ounce. Nevertheless, both metals retained a substantial portion of their recent gains.
Copper, which had surged primarily due to speculative fervor over a potential supply deficit, witnessed a sharp retreat from record highs as investors reassessed its future potential. The focus shifted to the ability to source copper shipments promptly to meet immediate demand.
Three-month benchmark copper futures on the London Metal Exchange plummeted 1.3% to $10,825.0 per ton, following Monday’s record high above $11,100. Similarly, one-month U.S. copper futures fell 1.1% to $5.0510 per pound, also stepping back from record levels.
