Gold prices fell sharply, with spot gold dropping 1.6% to $3,313.63 per ounce and futures slipping 2% to $3,327.10, reaching their lowest levels since early June.
The announcement of a ceasefire between Iran and Israel diminished the urgency for investors to seek refuge in traditional safe-haven assets like gold.
Market participants shifted toward risk-on modes, buoyed by hopes of reduced geopolitical tensions in the Middle East.
Peter Grant, senior metals strategist at Zaner Metals, noted that the easing of conflict has lessened gold’s appeal, although he identified support levels around $3,300 and $3,250 that could stabilize prices.
Market Reaction Reflects Optimism Despite Ceasefire Violations
Global stock markets surged and the U.S. dollar weakened following the ceasefire news, signaling increased investor confidence. However, skepticism remains as Israeli Defense Minister Israel Katz ordered new strikes on Tehran in response to alleged Iranian missile attacks, which President Trump described as violations of the ceasefire.
This ongoing volatility tempers expectations for a sustained gold price decline. Grant emphasized that while the ceasefire’s durability is uncertain, the downside risk for gold may be limited unless the conflict escalates further.
Did you know?
Gold prices have surged over 25% since the start of 2025, driven by inflation concerns and economic uncertainty, establishing a higher price floor compared to previous years.
Federal Reserve’s Stance Adds Complexity to Gold’s Outlook
U.S. Federal Reserve Chair Jerome Powell indicated that the Fed requires more time to assess inflationary impacts before considering interest rate cuts. Markets currently anticipate rate reductions starting in October, with a 50 basis-point easing expected by year-end.
Since gold thrives in low-rate environments due to its zero-yield nature, Powell’s cautious approach adds complexity to gold’s near-term price trajectory.
ALSO READ | Middle East Tensions Overpower Dollar Strength, Lifting Gold Prices
Technical Support Levels Suggest Price Stabilization Zones
Analysts point to strong technical support for gold near the $3,300 mark, with secondary support around $3,250. These levels have historically provided buying interest during price dips.
While gold faces downward pressure from reduced safe-haven demand, these support zones could prevent a sharper decline and offer opportunities for investors to accumulate positions.
Broader Precious Metals Market Shows Mixed Movements
Alongside gold, other precious metals experienced varied price action. Spot silver fell 1.2% to $35.70 per ounce, nearing its lowest level since early June. Platinum edged up 0.6% to $1,302.97, while palladium declined 2% to $1,055.69.
These mixed movements reflect differing sensitivities to geopolitical developments and industrial demand factors within the metals market.
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