Gold prices fell sharply at the start of the week, pulling back from near all-time highs as geopolitical risks were seen easing.
Prices fell to around $2,320 an ounce by Tuesday afternoon, down from around $2,330 an ounce in late deals on Monday, and from highs of over $2,400 at the end of the previous week.
Gold’s falling price on Monday and Tuesday was linked to an easing of geopolitical tensions after it became clear that Israel and Iran were not willing to enter into an escalating round of retaliatory air strikes that would risk a broader confrontation. Recent tensions in the Middle-East, as well as Russia and Ukraine, have increased the appeal of safe-haven assets like precious metals.
On the economic front, US manufacturing PMI figures for April released Tuesday came in weaker than the markets had expected, posting a four-month low. Signs of a weaker-than-expected economy strengthen the case for interest rate cuts, which are seen as supportive for non-interest-bearing assets like gold. However, the markets still appear to be dialling back expectations of as many as three interest rate cuts by the US Fed this year.
Looking ahead, Wednesday will see the release of monthly US durable goods orders for March, providing the latest snapshot on the state of the US economy.
Arguably more important will be the US GDP growth rate data for Q1 on Thursday, as well as the latest weekly initial jobless claims figures, both of which will play into expectations for the US Fed’s stance on monetary policy in the coming months.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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