Gold drops to near two-week low as Iran-Israel ceasefire lifts risk appetite

SINGAPORE: Gold prices fell to their lowest level in almost two weeks on Tuesday, as investors shifted towards riskier assets after reports of a ceasefire between Iran and Israel. The move eased market tensions and reduced demand for safe-haven investments. 

By 0257 GMT, spot gold was down 0.5 per cent at $3,351.47 an ounce, after briefly hitting its lowest point since June 11. US gold futures also slipped, falling 0.9 per cent to $3,365.30. 

The mood in financial markets brightened after US President Donald Trump announced that Iran and Israel had agreed to a ceasefire. The news raised hopes that the 12-day conflict, which forced millions to flee Tehran and stirred fears of broader regional violence, might be coming to an end. 

“There’s clearly a pullback in geopolitical tensions for now, especially with signs that things are easing between the US and Iran,” said Ilya Spivak, head of global macro at Tastylive. 

Earlier, an Iranian official confirmed Tehran’s agreement to a ceasefire. However, Iran’s foreign minister later said there would be no end to hostilities unless Israel stopped its attacks. So far, there has been no official response from Israel. 

Stock markets responded with gains, while oil prices dropped to a one-week low after Trump’s remarks, reflecting improved investor confidence. 

Meanwhile, in a separate development, US Federal Reserve Vice Chair for Supervision Michelle Bowman said on Monday that the time to consider cutting interest rates might be approaching, pointing to potential risks for the job market.

Investors are now focused on Fed Chair Jerome Powell’s upcoming testimony before the House Financial Services Committee later on Tuesday, looking for more signals about future rate decisions. 

Read next: Oil prices drop to lowest in over a week after Trump confirms Israel-Iran ceasefire