The fact that the Iran regime downplayed Israel’s response — and signaled no retaliation — has taken some risk premium out of the gold market, according to Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney. Monday’s bearish sentiment on oil also supported the idea of easing tensions in the Middle East, he added.
Beyond the Middle East, traders are focusing on US economic data, including the Federal Reserve’s preferred measure of inflation, which will give more clues on the path for monetary policy.
Gold remains about 13% higher this year after the recent surge to a record, with gains supported by central bank buying and demand from Asia, especially China. The commodity has risen despite advances in the US currency and 10-year Treasury yields, factors that would usually be a headwind. Against that backdrop, banks including Goldman Sachs Group Inc. have been raising their price targets for the precious metal.
Spot gold slipped 2.3% to $2,337.88 an ounce at 11:38 a.m. in New York, while the Bloomberg Dollar Spot Index edged higher. Silver sank about 5% after a four-week surge. Palladium and platinum also traded lower.
(By Yvonne Yue Li)
Related: China is front and center of gold’s record-breaking rally