Investing.com — Gold prices fell in Asian trading on Tuesday, extending short-term losses as waning concerns over geopolitical tensions in the Middle East sapped the yellow metal’s safe-haven demand.
This trade also made gold more vulnerable to the recent strength in US yields, while the prospect of longer US yields added to bullion price pressure.
fell 0.9% to $2,305.14 per ounce, while the June term fell 1.1% to $2,319.70 per ounce at 00:45 ET (04:45 GMT). Spot prices are now trading well below the record high of around $2,430 per ounce earlier in April.
The easing tensions in the Middle East mean that interest rate prospects are putting pressure on the gold price
Growing hopes that the conflict between Iran and Israel will not escalate further caused traders to price out risk premiums on commodity prices.
Gold has been a major beneficiary of increased demand for safe havens over the past two weeks after Iran and Israel launched attacks on each other. But after Israel’s latest attack on Iran, reports suggested Tehran was not seeking immediate retaliation.
This potential de-escalation undermined the demand for gold as a safe haven.
Declining safe-haven demand also made gold more vulnerable to the longer-term outlook for US yields, especially after hawkish signals from the Federal Reserve and persistent inflation data over the past two weeks.
Higher interest rates do not bode well for gold as they increase the opportunity cost of investing in the yellow metal.
The focus this week is on numbers – the Fed’s favorite inflation gauge – for more clues about interest rates.
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Other precious metals also fell on Tuesday. fell 0.9% to $922.35 per ounce, while it fell 0.8% to $27.017 per ounce.
Broader metals prices were also pressured by the resilience of the dollar, which remained near a five-month high.
Copper and aluminum prices are falling from recent highs
Among industrial metals, copper prices fell on Tuesday from nearly two years ago, after top producer Chile said it will increase production at state miner Codelco this year.
on the London Metal Exchange fell 1.2% to $9,749.50 per tonne, while the price fell 1.1% to $4.4343 per pound. Both contracts fell from the highest level in almost two years.
Chiles’ prospects largely offset recent expectations that global copper supplies will tighten due to tougher U.S. sanctions on Russian metal exports. This idea was a major driver of copper price increases last month.
also got caught up in the industrial metals selling frenzy, down 1% from recent 15-month highs.
