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Gold prices dropped to their lowest point in nearly two weeks on Tuesday as investor confidence grew following US President Donald Trump’s announcement of a ceasefire agreement between Iran and Israel, which decreased the demand for safe-haven assets.
As of 0257 GMT, spot gold decreased by 0.5 percent to $3,351.47 per ounce, following a dip to its lowest level since June 11 earlier in the day.
Read-Gold advances as Israel-Iran tensions enhance safe-haven demand
US gold futures fell by 0.9 percent to $3,365.30.
“There’s likely a significant amount of geopolitical risk being alleviated from the market short-term, particularly due to the signs of easing tensions between the US and Iran,” noted Ilya Spivak, head of global macro at Tastylive.
Trump declared a full ceasefire between Israel and Iran, which could potentially conclude the 12-day conflict that resulted in mass evacuations from Tehran and heightened fears of further escalation in the region.
Israel has not provided an immediate response. Earlier, an Iranian official confirmed Tehran’s agreement to a ceasefire, but the foreign minister stated that hostilities would not cease unless Israel halted its attacks.
Global stock markets rose, while oil prices fell to a one-week low in reaction to Trump’s announcement regarding the Iran-Israel ceasefire.
Additionally, US Federal Reserve Vice Chair for Supervision, Michelle Bowman, indicated on Monday that the right moment to lower interest rates is nearing due to possible risks to the job market.
Investors are looking forward to the testimony of Fed Chair Jerome Powell before the House Financial Services Committee later on Tuesday. Powell has previously shown caution in indicating any imminent rate cuts.
“The outlook for gold prices is generally positive, but a short-term correction could occur along with a rise in the dollar if Powell reassures markets that rate cuts will not exceed two this year,” Spivak added.
Gold typically performs well in a low-interest-rate setting.