Gold Prices Drop Over 2% to One-Week Low; Silver Prices Drop by 4.6%

Gold prices dropped more than 2% to a one-week low on Monday as worries over a wider Middle East conflict subsided, prompting investors to scale back safe-haven trades in favor of riskier assets, like equities.

Yesterday at 9:43 a.m. ET (13:43 GMT), gold was down 2.3% to $2,336.29 per ounce, signaling its most significant intra-day decline in over a year. Meanwhile, U.S. gold futures declined by 2.7% to $2,349.70.

Gold faced a downward pressure as the main indices of Wall Street began on a higher note, concurrently reducing the demand for the safe-haven and non-interest-bearing assets. "Some risk of an imminent retaliation in the Middle East has been removed, which has attracted some selling activity in gold. But the question is how much scope there is to the downside," said Daniel Ghali, a commodity strategist at TD Securities.

Many annalists have noted the record high of $2,431.29 for gold on April 12 was fueled by geopolitical tensions alongside strong central bank purchasing and  many investors are currently anticipating cues from the release of the U.S. personal consumption expenditures (PCE) report on Friday, which will shed light on the likelihood of U.S. interest rate cuts.

“Gold prices witnessed sharp gap down move, as middle east tensions were missing over the weekend. There was no further escalation which gave profit booking in Gold in Comex as prices took profit booking from $2400 zones to $2360 in where as in MCX a gap down of ₹600 at 72150 was seen. Price further went on to be weak as profit booking continued in Gold, for the week ahead price correction can continue as long as there is no new fresh trigger in middle east. 72500 will act as major hurdle for Gold MCX," said Jateen Trivedi, VP Research Analyists - Commodity and Currency, LKP Securities. He also added, “Gold and Crude oil price, both are down trading in the negative territory, as market participants are now looking for fresh triggers as the safe-haven demand and the risk premium due to Israel-Iran tussle seem to have eased, while a stronger U.S is seen weighing in on the commodities basket. Technically, Gold looks sideways/consolidative with support at ₹71,650-71,200 and resistance at ₹72,400-72,850."

Chicago Federal Reserve President Austan Goolsbee on Friday said progress on bringing down inflation has "stalled" this year, becoming the latest official to drop an earlier focus on the coming need for rate cuts. "Gold could revisit all-time highs in case of a surprise PCE report that shows inflation cooling. We still expect buying activity out of Asia to remain resilient as gold is seen as a currency-appreciated hedge in Asia," Ghali added.
 

Silver prices also tumbled by ₹1,100 to ₹85,500 per kg. In the previous close, it had closed at ₹86,600 per kg. Silver was also trading lower at $27.95 per ounce. In the previous session, it had finished at $28.66 per ounce. Further, silver contracts for May delivery were also trading lower by ₹1,785 or 2.14 per cent to ₹81,722 per kg on the bourse. Additionally, other metals experienced notable drops, with spot silver losing 4.6% to reach $27.35 per ounce, platinum declining by 1% to $922.00, and palladium falling by 1.8% to $1,008.25.