On Tuesday, gold prices dropped to their lowest point in over two weeks, influenced by reduced worries about escalations in the Middle East crisis and as investors decided to secure profits while waiting for crucial U.S. data that could hint at future Federal Reserve interest rate decisions.
Spot gold decreased by nearly 1% to $2,304.99 per ounce around 0336 GMT, and U.S. gold futures saw a 1.2% decline to $2,318.80. “Gold has been the recipient of different types of buying flows in recent months, and now one of those flows has slightly dried up with safe-haven demand receding,” commented Tim Waterer, chief market analyst at KCM Trade.
In the previous trading session, gold experienced its largest intraday decrease in over a year, more than 2%, following Iran’s announcement that it would not retaliate after an apparent Israeli drone strike. “Investors are seeing this as an opportunity to lock in some profits after gold’s recent run of good form,” Waterer noted.
The record high for gold was set on April 12 at $2,431.29. Key economic events this week include Thursday’s gross domestic product (GDP) data and Friday’s Personal Consumption Expenditures (PCE) figures. “If these happen to produce a beat to the upside we could see a further extension of the wait for interest rate relief.
Such a scenario could cause the gold price to take a larger step back … in the short term from an opportunity cost perspective,” Waterer explained. Market expectations are for a 0.3% rise in the headline PCE figure for March, consistent with the previous month, and a year-over-year increase of 2.6%, slightly up from February’s 2.5%, as per a Reuters poll. Other precious metals also saw declines; spot silver dropped about 1% to $26.92 per ounce, spot platinum fell 0.7% to $911.10, and palladium decreased by 1.1% to $997.75.
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