Gold prices slip as tensions in Middle East de-escalate

24 Apr 2024 , 09:26 AM

As investors awaited important U.S. economic data that could provide further insight into the timing of interest rate decreases, gold prices started to decline on Wednesday as concerns over an intensification of the Middle East war subsided.

Spot gold was down 0.1% at $2,320.19 per ounce, after closing the previous session at its lowest level since April 5. On April 12, gold reached an all-time high of $2,431.29 thanks to a surge that began in March and continued into April.

The ounce of U.S. gold futures was down 0.4% at $2,333.80.

After Iran declared it had no intention of retaliating against what appeared to be an Israeli drone attack, fears of a wider regional conflict in the Middle East subsided.

U.S. Federal Reserve officials recently stated that there is no pressing need to lower interest rates. The first Fed rate cut is currently anticipated by traders to occur in September, most likely.

Having non-yielding gold becomes less appealing when interest rates rise.

In April, U.S. business activity decreased, and inflation rates decreased despite a strong increase in input costs. These trends point to potential respite in store as the Fed watches for indications that the economy is slowing down sufficiently to reduce inflation even further.

To learn more about the direction of monetary policy, markets will be watching for the release of the Fed’s favoured inflation indicator, the March personal consumption expenditure (PCE) data later this week.

Bundesbank President Joachim Nagel stated that the European Central Bank cannot lower interest rates until it is persuaded that inflation is returning to its target of 2%.

Spot silver decreased by 0.2% to $27.24 per ounce, palladium decreased by 0.1% to $1,018.50, while platinum increased by 0.3% to $910.15.

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