Gold prices were caught in a tug-of-war on Tuesday, dipping to a week’s low as safe-haven demand softened as Israel agreed to a ceasefire deal with Lebanon, while concern over Ukraine and U.S. President-elect Donald Trump’s tariff plans limited declines.
Spot gold was steady at $2,626.83 per ounce as of 02:07 p.m. ET (1906 GMT), erasing some of the earlier losses when prices hit their lowest since Nov. 18. U.S. gold futures settled 0.1% higher at $2,621.30.
This follows Monday’s dramatic $100 plunge, when gold retreated from a three-week high. The sell-off was fueled by Israel and Hezbollah ceasefire optimism and further pressured by Trump’s nomination of Scott Bessent as Treasury Secretary, which tempered demand for gold as a safe haven.
Israel’s security cabinet has agreed a ceasefire deal with Lebanon, Channel 12 reported on Tuesday.
“It’s probably some realization that a ceasefire between Israel and Hezbollah only modestly mitigates overall geopolitical risks, certainly there’s some optimism there,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Concern over the wider fallout from Russia’s invasion of Ukraine continues to remain very high, however, Grant said adding that gold will likely experience choppy consolidation in the near term, ranging between $2,575-$2,750.
Gold is traditionally seen as a safe investment during economic and geopolitical uncertainty such as trade wars.
Trump’s pledge of big tariffs on Canada, Mexico, and China loom large. While they could spark trade wars and bolster gold’s appeal, the resulting inflation risks might tamper Federal Reserve rate cuts, potentially weighing on prices, analysts said.
Markets are now focused on Fed November meeting minutes later in the day. With a 56% chance of a December rate cut being priced in, investors remain cautious.
Minutes of the Federal Reserve’s Nov. 6-7 meeting showed, officials expressed differing views on potential future rate cuts. However, they collectively decided to withhold specific guidance on the likely direction of U.S. monetary policy.
Some participants suggested a pause in rate easing if inflation stays high, while others proposed accelerated cuts if the labor market or economic activity weakens.
Spot silver rose 0.4% to $30.40 per ounce and palladium gained 1% to $982.87.
Platinum lost 1.3% to $926.35, with Commerzbank analysts forecasting platinum prices to hit $1,100 in 2025.
CNBC