(Bloomberg) -- Gold fell from near record highs after Israel’s retaliatory strikes on Iran were more restrained than many expected, easing geopolitical risks that stoke demand for the haven asset.
Israel’s long-awaited assault on Iran avoided hitting the country’s oil facilities, easing perceived risks and thereby pressuring demand for gold. US 10-year Treasury yields rose, a move that’s often seen as bearish for gold, which doesn’t pay interest.
“The more targeted response from Israel leaves the door open for de-escalation,” said Ewa Manthey, commodities strategist at ING Bank NV. Recent data also show China’s demand for gold — one of the key drivers of this year’s rally — has slumped, she added.
US inflation and payroll figures later this week should offer clues on the path forward for widely anticipated rate cuts by the Federal Reserve. There will also be focus on earnings reports by miners of precious metals, including No. 3 producer Agnico Eagle Mines Ltd. on Wednesday. Meanwhile, the countdown to the US presidential election continues.
“Election uncertainty is playing its part in preventing a deeper correction,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.
Gold has surged by more than 30% this year, peaking at an all-time high of $2,758.49 last week. Expectations of Fed rate cuts, robust central bank buying and safe-haven demand amid ongoing conflicts in the Middle East and Ukraine have supported the metal.
Money managers have also played their part, by raising net-long positions, and investors have been adding to exchange-traded fund holdings.
Spot gold fell 0.2% to $2,741.92 an ounce at 11:56 p.m. in New York. The Bloomberg Dollar Spot Index was little changed while the US 10-year Treasury yield gained. Palladium and platinum rose, while silver slipped.
--With assistance from Sybilla Gross.
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