Gold prices experienced a decline in Asian trade on Tuesday, extending losses from the previous session as easing concerns over geopolitical tensions in the Middle East reduced the safe haven appeal of the precious metal.
Spot gold slid by 0.9% to $2,305.14 an ounce, while gold futures expiring in June fell by 1.1% to $2,319.70 an ounce as of 00:45 ET (04:45 GMT). These declines followed spot prices trading well below a record high of approximately $2,430 an ounce reached earlier in April.
The easing of tensions between Iran and Israel led traders to scale back risk premiums from commodity prices, diminishing the safe haven demand for gold. Despite benefiting from increased safe haven demand in the preceding two weeks following strikes between the two countries, the latest attack by Israel on Iran, coupled with reports suggesting Tehran’s lack of immediate retaliation, further weakened gold’s appeal as a safe haven asset.
Moreover, gold faced vulnerability to the strengthening dollar and the prospect of sustained higher U.S. interest rates. Recent signals from the Federal Reserve indicating a hawkish stance and persistent inflation readings have heightened concerns about higher rates, which diminish the attractiveness of gold as they increase its opportunity cost.
Investor focus this week is on the Personal Consumption Expenditures (PCE) price index data, the Fed’s preferred inflation gauge, for further insights into the trajectory of interest rates.
In addition to gold, other precious metals also witnessed declines on Tuesday. Platinum futures fell by 0.9% to $922.35 an ounce, while silver futures slid by 0.8% to $27.017 an ounce.
The broader decline in metal prices was attributed to the resilience of the dollar, which remained close to over five-month highs.
In the realm of industrial metals, copper prices retreated from near two-year highs after an announcement by top producer Chile regarding plans to increase production at state-run miner Codelco this year. Three-month copper futures on the London Metal Exchange fell by 1.2% to $9,749.50 a ton, while one-month copper futures declined by 1.1% to $4.4343 a pound. This decline followed recent expectations of global copper supplies tightening amid stricter U.S. sanctions on Russian metal exports.
Aluminum prices also declined by 1% from recent 15-month peaks amidst the selling frenzy in industrial metals.
