Gold prices tumble as tensions between Israel and Iran ease
Gold future prices experienced a significant drop as tensions between Israel and Iran eased, causing a decline in safe-haven demand. June futures on the New York Mercantile Exchange fell 1.2% to $2,317.7 per troy ounce, marking the lowest price since April 5. While prices have slipped 2.7% over the last week from the all-time high reached on April 12, they are still up 12.5% over the last three months.
Tensions simmer down between Israel and Iran
Israel launched a limited retaliatory strike against Iran in response to a drone and missile attack by the latter. Iran’s foreign ministry spokesman noted that Israel had received the “necessary response at this stage.” The market interpreted the restrained nature of Israel’s attack and Iran’s soft rhetoric as efforts to prevent further escalation, leading to a sharp decline in both oil prices and gold.
Market response and outlook
According to Deutsche Bank analysts, the recent decline in gold prices, marking the largest daily drop since June 2021, was influenced by the geopolitical developments. While the risk of a further correction in gold prices in the near term remains high, JPMorgan analysts believe that geopolitics could serve as a bullish wildcard. JPMorgan forecasts that gold prices will average $2,500 per ounce in the fourth quarter of 2024, with potential for further upside in the following year.
Additional Insight
It is crucial for investors to closely monitor geopolitical developments and their impact on the price of gold. Despite the recent decline, the potential for fluctuations remains high, especially as tensions between nations can quickly reignite and drive safe-haven demand for gold. This makes it essential for investors to stay informed and adapt their strategies accordingly in response to changing geopolitical dynamics.
