(Bloomberg): Gold prices plunge on a single day for the first time in nearly two years, on signs that the U.S. Federal Reserve will raise interest rates in response to easing tensions in the Middle East and a prolonged squeeze in demand. recorded, increasing losses.
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The precious metal fell towards $2,300 an ounce after falling 2.7% on Monday as concerns about an escalating conflict between Israel and Iran faded. The Iranian government downplayed the impact and significance of Tel Aviv's latest attack, saying Israel was receiving “the necessary response at this stage.”
Richard Grace, senior currency analyst and international economist at ITC Markets, said that following the easing of tensions in the Middle East, “we are seeing some profit taking, and considering the recent rise in gold prices, there may have been some tactical short selling.'' “It's very sexual,” he said. Note.
Bullion prices have risen about 16% since mid-February, supported by geopolitical risks, central bank buying and demand from Chinese consumers. Precious metals rose even as the dollar and Treasury yields rose on signs that the Federal Reserve would delay a long-awaited policy shift.
Read more: China is front and center in gold's record-breaking rise
Traders are now focusing on U.S. economic data due out this week, including the Fed's recommended inflation measure, which could provide further clues about the path of monetary policy. Policymakers have become increasingly hawkish on the outlook for interest rates in recent weeks following a series of strong inflation reports.
As markets continue to dampen expectations for monetary easing this year, precious metals may be forced to consider the prospect of a longer-term higher interest rate environment, which is typically a headwind for gold, which does not pay interest. It's a scenario. .
At 11:09 a.m. Singapore, spot gold fell 1.1% to $2,302.05 an ounce. The Bloomberg Dollar Spot Index was flat. Silver fell after falling 5.2% in the previous session. Palladium and platinum also fell.
–With assistance from Georgina McKay.
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