Gold: Continues the plunge – Analysts see short selling – Economic Postman

Gold is down for a second day in a row after its biggest intraday loss in nearly two years on Monday. The looming easing of geopolitical risks in the Middle East is curbing demand for the safe-haven investment, with investors now focused on the Federal Reserve’s interest rate policy.

At the same time, there are not a few who rushed to capitalize their gains, after the rally of the previous days.

Spot gold was down about 0.9% at $2,307.19 an ounce in the Singapore market, after plunging 2.7% on Monday. The Bloomberg Dollar Spot index was flat. Silver fell, after falling 5.2% in the previous session. Palladium and platinum are also moving lower.

Concerns about an escalating conflict between Israel and Iran eased on Monday as Tehran downplayed the impact and significance of Tel Aviv’s recent strike, saying Israel had received the “necessary response at this stage”.

Gold: China drags the dance of demand and price jump

The look at the… macro

Traders are now focusing on US economic data due this week, including the Fed’s preferred measure of inflation, which will give more clues about the path of monetary policy. Policymakers have become increasingly hawkish on the outlook for interest rates in recent weeks after a string of strong inflation reports.

As markets continue to moderate expectations of monetary easing this year, the precious metal will be weighed down by the prospect of an environment where interest rates will remain high for a longer period of time, a scenario that is usually burdensome for gold as it does not pay interest.

However, gold is up about 12% so far this year, with gains supported by central bank buying and demand from Asia, especially China. The commodity rose despite gains in the US currency and 10-year Treasury yields. Markets will also watch a series of US bond auctions this week, which could test investor appetite.

“The easing of escalating tensions in the Middle East has taken profits and some tactical short selling is likely given the recent rally in gold prices,” said Richard Grace, senior currency analyst and international economist at ITC Markets.