Gold retreats as fears of wider Middle East conflict subside

Spot gold was down 2% at $2,354.61 per ounce, as of 1148 GMT. U.S. gold futures fell 2.4% to $2,357.00.

Gold prices retreated 2% on Monday as easing fears of a wider Middle East conflict boosted investors’ risk appetite, lowering bullion’s safe-haven demand.

Spot gold was down 2% at $2,354.61 per ounce, as of 1148 GMT. U.S. gold futures fell 2.4% to $2,357.00.

Worries of ongoing tensions between Iran and Israel becoming an all-out war fading a little bit has stopped safe-haven trade that supported gold prices, said Ricardo Evangelista, senior analyst at ActivTrades.

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

Gold reached $2,417.59 per ounce in the previous session, approaching the April 12 record high of $2,431.29 as investors sought refuge in the metal’s safe-haven.

Yet, as the new week began, equities regained some ground and oil prices, along with bonds, fell slightly, indicating a shift away from the defensive stance adopted by investors ahead of the weekend. [MKTS/GLOB] [O/R]

The U.S. personal consumption expenditures (PCE) report due on Friday may confirm prevailing fears of persistent inflation, potentially postponing interest rate cuts – a negative outlook for gold, Evangelista said.

Progress on bringing down inflation has ”stalled” this year, Federal Reserve of Chicago 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.

Spot silver fell 4% to $27.51 per ounce.

”There is a risk to the downside for platinum autocatalyst demand, particularly if weak growth in Europe continues later in the year,” analysts at Heraeus Metals wrote in a note.

Platinum lost 1.1% to $921.60 and palladium was down 2.2% at $1,004.31.