2024-05-21T07:07:14+00:00
Shafaq News / Gold prices eased on Tuesday as the dollar firmed, with the metal backing away from a record peak hit in the previous session on bullish factors such as growing U.S. rate cut bets and geopolitical risks driving safe-haven demand.
Spot gold was down 0.5% at $2,413.69 per ounce, as of 0538 GMT, after hitting a record high of $2440.49 on Monday.
U.S. gold futures fell 0.9% at $2,417.10.
The dollar rose 0.1%, making greenback-priced bullion less attractive to buyers holding other currencies.
Lower interest rates and geopolitical uncertainties make bullion a favorable investment.
“Market expectations of interest rate cuts starting this year have gone up a bit with the cooling inflation numbers that came in last week. On the other side, geopolitical risks played a major role in pushing gold prices to a fresh record high,” said ANZ commodity strategist Soni Kumari.
“China buying has been exceptional in the first quarter with their bar and coin demand being very strong, recording its highest since 2017. These factors are offsetting the investment outflows in ETFs (exchange traded funds) and pushing prices higher.”
Minutes of the Federal Reserve’s last policy meeting due on Wednesday along with comments from a slew of Fed speakers will be keenly awaited this week.
Adding to gold’s upside was elevated risk aversion as Iranian President Ebrahim Raisi was killed in a helicopter crash near the Azerbaijan border on Sunday.
Spot silver fell 1.4% to $31.38 an ounce after hitting a more than 11-year high in the last session.
“Silver is the beta for gold. Investors are attracted to silver because fundamentals are very strong coupled with growing industrial demand and it’s a cheaper alternative to gold,” Kumari said.
Platinum lost 0.9% to $1,036.95, after hitting its highest since May 12, 2023, on Monday. Palladium dropped 1.9% to $1,007.75.
(Reuters)
The Impact of Economic Data on Gold Prices
Economic data such as inflation numbers and interest rate cuts can have a significant impact on gold prices. As seen in the recent cooling inflation numbers, gold prices rose due to heightened expectations of interest rate cuts. Investors closely monitor economic indicators to gauge the future direction of gold prices.
Geopolitical Risks and Safe-Haven Demand
Geopolitical tensions, such as the unfortunate incident involving Iranian President Ebrahim Raisi, can drive safe-haven demand for gold. Gold is often sought after as a hedge during times of uncertainty and political instability, leading to price hikes in response to elevated risk aversion in global markets.
Diversification with Silver and Platinum
Investors looking to diversify their precious metal holdings often turn to silver and platinum as alternatives to gold. Silver’s industrial demand and lower price point compared to gold make it an attractive option for investors, while platinum’s unique properties and historical price trends offer opportunities for portfolio diversification.
