· Gold shed over 1% after vaulting above the $1,600 level for the first time in nearly seven years on Wednesday after remarks by U.S. President Donald Trump eased fears of a larger conflict with Iran.
· Spot gold dropped nearly 1% to $1,559.22 per ounce as of 1:32 p.m. ET (1834 GMT). Prices had earlier soared to $1,610.90 in the session, their highest level since March 2013. U.S. gold futures settled 0.9% lower at $1,560.20.
· Trump said Iranian missile strikes on bases in Iraq had not harmed any U.S. troops, and that Tehran appeared to be standing down.
· Earlier in the session gold jumped as much as 2.4% after Iran retaliated to a U.S. drone strike that killed an Iranian military commander last week. The U.S. attack led to fears of a new war in the Middle East.
· “Expectations are that we’re not going to see a war, so you might see some softness. The rest of the catalysts remain in place for gold,” said Edward Moya, a senior market analyst at OANDA.
“We could see some weakness down to $1,550, but in the end we are likely to see prices continue to march higher to $1,640 in the short term.”
However, with no casualties after the strike and tweets from Iranian officials stating that Tehran did not want a war and that its strikes “concluded” its response to Friday’s killing, concerns of conflict in the region ebbed, dampening demand for safe-haven gold.
· Gold is a preferred asset during times of political and economic uncertainty.
· “Although the hostilities seem to be over - at least for now - the situation could easily re-escalate in fairly short order,” said Edward Meir, analyst at ED&F Man Capital Markets.
· The geopolitical and economic drivers which impacted gold prices in 2019 - including U.S.-China trade tensions, Brexit and the U.S. Federal Reserve’s monetary policy - would continue into 2020, the World Gold Council said in a note.
· Investors also kept a close eye on economic data from the United States. Data showed U.S. private payrolls surged in December, weighing on the metal.
· Meanwhile, palladium extended its rally, undaunted by most market events driving other precious metals. Prices were up 2.6% at $2,104.95, close to the all-time high of $2,108.81 notched earlier in the session.
Platinum eased 1.4% to $957.02 an ounce, while silver shed 1.3% to $18.15. Silver prices had earlier notched a four-month high of $18.85.
Reference: Reuters
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