Gold eases off 7-year peak as Middle East worries abate

Gold retreated after vaulting above the $1,600 level for the first time in nearly seven years on Wednesday as fears of a larger conflict in the Middle East abated on milder rhetoric between Iran and the United States.

Spot gold fell 0.95% to $1,558.93 per ounce, having soared to $1,610.90 earlier in the session, its highest level since March 2013. Meanwhile, U.S. gold futures fell 0.87% lower to $1,560.7.

“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

Gold jumped as much as 2.4% in the session after Iran attacked U.S.-led forces in Iraq in retaliation for 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.

However, the United States said it is not aware of any casualties resulting from Iran’s attack.

Tweets from Iranian officials stating that Tehran did not want a war and that its strikes “concluded” its response to Friday’s killing, and U.S. President Donald Trump’s comment that “all is well,” helped ebb concerns of conflict in the region.

“Gold is seeing minor profit-taking after tumultuous moves supported by stocks see-saw due to geopolitical events in Middle East,” George Gero, managing director at RBC Wealth Management, said in a research note, adding that a trading range of $1,550-$1,600 will likely hold for now.

Gold is a preferred asset during times of political and economic uncertainty.

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 for clues to the health of the world’s largest economy. 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 2.4% at $2,100, close to the all-time high of $2,106 notched earlier in the session.

Platinum eased 1.1% to $960.66 an ounce, while silver shed 0.3% to $18.33. Silver prices had earlier notched a four-month high of $18.85.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya