Gold prices fell in Asian trade on Tuesday, retreating from record highs due to easing uncertainty over Iran, which diminished the metal’s appeal as a safe haven. Additionally, ongoing concerns about U.S. interest rates continued to pressure gold prices.
Gold Prices Drop as Safe Haven Demand Eases
Gold surged to a record high on Monday, driven by increased demand for safe havens following the death of Iran’s President in a helicopter crash. However, the immediate geopolitical impact of his death remained unclear, leading to reduced safe haven demand for gold.
Spot gold fell 0.5% to $2,413.77 an ounce, while gold futures for June delivery declined 0.9% to $2,416.75 an ounce by 00:59 ET (04:59 GMT). On Monday, spot gold had reached a record high of nearly $2,450 an ounce.
The lack of significant instability in the Middle East weakened the demand for gold as a safe haven, making it more susceptible to concerns about U.S. interest rates. Several Federal Reserve officials indicated on Monday that the central bank needs more evidence of easing inflation before considering interest rate cuts, suggesting that rates will remain high for an extended period.
The dollar strengthened as markets awaited the minutes of the Fed’s late-April meeting, due Wednesday. This strengthened the dollar and pressured broader metal prices, curtailing the rally in gold prices. High interest rates reduce the attractiveness of non-yielding assets like gold by increasing the opportunity cost of holding them.
Other precious metals also saw declines on Tuesday. Platinum futures fell 1.6% to $1,042.60 an ounce, while silver futures dropped 2.5% to $31.628 an ounce. Despite these declines, both metals retained most of their recent gains.
Copper Prices Retreat from Record Highs
Copper prices sharply retreated from the record highs reached on Monday as investors took a step back to evaluate the red metal’s potential for the year. The recent rally in copper was primarily driven by speculation over a potential supply deficit, which led to a short squeeze on the Comex exchange and further gains.
On Tuesday, these gains began to cool, with market focus shifting to whether sufficient copper shipments could be secured to meet immediate demand. Three-month benchmark copper futures on the London Metal Exchange fell 1.3% to $10,825.0 a ton, after hitting a record high above $11,100 on Monday. One-month U.S. copper futures also declined, falling 1.1% to $5.0510 a pound, retreating from their record highs.