Key Takeaways
- Gold prices declined by 0.3% to $4,362.60 per ounce.
- Market focus remains on geopolitical developments in the Middle East.
- Central banks' rate hikes are expected to curb gold's demand.
Gold prices slipped by 0.3% to $4,362.60 per ounce on Monday, following a one-week high on Friday. The decline was attributed to ongoing geopolitical tensions in the Middle East and concerns over interest rate hikes.
The United States and Iran exchanged new threats, with President Donald Trump warning Iran that it would face severe economic consequences or leadership annihilation if it did not make a deal. In response, the Iranian military vowed to retaliate harshly to any fresh attacks.
Tim Waterer, chief market analyst at KCM Trade, stated, 'The focus remains on geopolitics, oil and the reaction in bond yields. For gold to gain meaningful upside traction, a clear move lower in oil and/or bond yields is likely required.'
Oil prices fell as hopes for diplomacy in the Iran conflict increased, with a UN meeting scheduled and partial recovery in shipments from Saudi Arabia amid ongoing attacks by Yemen’s Houthis.
Central banks around the world are tightening monetary policies, with the Bank of Japan raising rates, following rate increases by the Federal Reserve and the European Central Bank. Analysts at Standard Chartered noted that rising rates tend to curb gold's demand by making interest-bearing assets more attractive.
Despite the decline, gold remains volatile but continues to find firm downside support from official-sector demand, according to analysts. They highlighted structural drivers that could lift prices, albeit at a slower pace.
Among other metals, spot silver rose by 0.2% to $66.37, platinum fell by 0.1% to $1,798.31, and palladium added 0.6% to $1,309.65.
Tim Waterer added, 'Gold may trade in a roughly $4,200 to $4,580 range in the near term.'
The focus remains on geopolitics, oil and the reaction in bond yields. For gold to gain meaningful upside traction, a clear move lower in oil and/or bond yields is likely required.
Tim Waterer, Chief Market Analyst at KCM Trade
Gold may trade in a roughly $4,200 to $4,580 range in the near term.
Tim Waterer, Chief Market Analyst at KCM Trade
