Price of gold descended further on Tuesday from the previous session’s near seven-year high, as tensions in Middle East cooled and investors booked profit, while palladium achieved a new high.
Spot gold sank 0.4% to $1,559.11 per ounce by 0341 GMT. This is its biggest daily percentage decline in about a month. In the previous session, prices had touched $1,582.59, the highest since April 2013.
Meanwhile, U.S. gold futures slipped 0.5% to $1,561.00.
A senior market analyst for the Asia-Pacific region at OANDA, Jeffrey Halley noted: “With no immediate retaliation from Iran, some of the tensions have simmered. Also, we’ve seen some profit-taking coming in.”
“If things de-escalate (with Iran), then gold will hit lower pretty quickly. We would see it go down below $1,500,” he said.
Gold, considered a safe haven in times of political and economic uncertainty, had jumped in the last two sessions on concerns of a wider conflict after a U.S. authorized air strike killed Iran’s top military commander Qassem Soleimani on Friday.
There were concerns in the market about conflicting reports of American military repositioning troops in preparation for leaving Iraq.
Further weighing on gold, Asian shares rebounded with fading tensions in the Middle East.
In addition to that, oil prices relinquished gains on speculation that Iran might not strike against the United States in a way that would interrupt supplies.
However, risks of escalating tensions persisted, with the United States denying a visa to Iran’s Foreign Minister Mohammad Javad Zarif. The Iranian minister was supposed to attend a United Nations Security Council meeting in New York on Thursday.
“With $15-$20 setbacks the new intraday norm (in gold), look for volatility to remain elevated,” a market analyst at AxiTrader, Stephen Innes, said in a note.
SPDR Gold Shares (also known as SPDR Gold Trust), rose 0.10% to 896.18 tonnes on Monday, their highest since Nov. 27.
Traders increased their bullish positions in COMEX gold and silver contracts in the week to Dec. 31, according to a report.
Elsewhere, spot palladium receded 0.3% to $2,024.75, off an all-time high of $2,032.94 an ounce hit earlier in the session.
The industrial metal, suffering from persistent supply woes, gained about 54% last year.
Silver stumbled 0.5% to $18.05 an ounce, after touching a more than three-month high at $18.50 in the previous session, while platinum progressed 0.3% to $965.76.
