Gold retreats, in a climate of relief after the easing of tensions in the Middle East

Gold edged lower on Monday as geopolitical tensions eased, at least for now in the Middle East, dampening demand for the safe-haven investment, with traders turning their attention to the next round of macroeconomic data from the U.S. light on the outlook for monetary policy in the world’s largest market.

Gold was trading just below $2,364 an ounce after a five-week rally, the longest such streak in more than a year, in which prices hit a record high. While Israel and Iran have traded blows, raising fears of an all-out war in the region, Tehran has played down the impact and significance of Israel’s recent offensive.

The fact that the Iranian regime downplayed Israel’s response – and did not announce retaliation – has taken some of the risk premium out of the market, according to Nicholas Frappell, head of global institutional markets at Sydney-based Refinery ABC. Bearish sentiment in the oil market on Monday also supports the idea of ​​easing tensions in the Middle East, he added.

As for US macro data, on Friday the personal consumption expenditure (PCE) price index is expected to be reported at 2.6% for March on an annual basis, up from 2.5% in February. If the forecasts are confirmed, Federal Reserve policymakers will have a stronger case for delaying interest rate cuts, a scenario that would weigh on gold, which does not provide a yield.

Gold has gained about 15% so far this year, with gains supported by central bank purchases of the metal and demand from Asia, particularly China. The commodity has gained ground despite a stronger dollar and yields on the 10-year U.S. Treasury note, factors that typically weigh on gold prices. In this context, banks, including Goldman Sachs, have increased their target price for the metal.

Spot gold thus slid 1.2% to $2,363.66 an ounce at 1:48 p.m. Singapore time on Monday, while yields on the 10-year US Treasury note rose and the Bloomberg Dollar Spot Index was down 0.1%. Silver is sinking about 3%, after a four-week rally. Palladium and platinum are also trading at a loss.