Gold set for biggest one-day fall since December as geopolitical concerns ease

United States

Gold prices tumbled on Monday as investors weighed up fading geopolitical tensions eased and investor appetite swung towards stocks and other perceived riskier assets.

Gold based on continuous prices GC00, -1.62% GCM24, -1.62% fell $ 39.50, or 1.6%, to $ 2,374.50. That percentage drop is the biggest one-day decline since Dec. 4, 2023 when the contract tumbled 2.27%. Front-month gold for April delivery GCJ24, -1.64% marked a new record close on Friday, surging $ 16.10 to $ 2398.40 an ounce.

“With tensions in the Middle East showing signs of easing, the market’s attention shifted towards assessing the resilience of the US economy and the persistent grip of inflation,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note to clients.

“As prospects for a near-term rate cut by the Federal Reserve diminish and optimism grows regarding the avoidance of an overt conflict between Israel and Iran, gold prices could be poised for a correction, as traders may start closing long positions and capitalizing on the profits accrued over the past month,” they said.

Marios Hadjikyriacos, senior investment analyst at XM, told clients that judging by “measured” counterattacks, clearly neither Israel nor Iran were “interested in an actual war.”

“The same goes for the United States, which has been trying to defuse tensions behind the scenes. Hence, investors are piling back into riskier trades and liquidating their hedges, hopeful that the aftershocks will be contained,” said Hadjikyriacos.

Up, 14% so far this year, gold has been boosted recently by a volley of attacks between Israel and Iran recently, though the weekend proved quiet. Stock futures were rising on Monday, with those for the S&P 500 ES00, +0.61% up 0.5% and for the Nasdaq Composite NQ00, +0.77% up 0.6%.