Gold prices plummeted to a two-week low, dropping over 1% to $3,322.09 per ounce, while oil prices plunged after US President Donald Trump announced a surprise ceasefire deal between Israel and Iran. The agreement, set to last for 12 days, has shifted investor sentiment, driving them away from safe-haven assets like gold and toward riskier markets.
Market Reaction
- Gold Prices: Spot gold fell 1.4% to $3,322.09 per ounce, while US gold futures declined 1.7% to $3,336.00 per ounce, reflecting a broader market move away from safe-haven assets.
- Oil Prices:
- West Texas Intermediate (WTI) crude oil prices dropped around 9.3% after the ceasefire announcement, easing fears of supply disruptions and reducing demand for safe-haven assets.
- Stock Markets:
- Global shares surged, with the S&P 500 and Nasdaq 100 rebounding sharply after retesting key near-term support levels. Asian markets mirrored the upbeat tone, with Japan’s Nikkei 225 rising 1.24% and Hong Kong’s Hang Seng Index climbing 1.8%.
- Currencies:
- The US dollar weakened, with the US Dollar Index falling 0.4% after being rejected at its 50-day moving average of 99.50. High-beta currencies like the Australian and New Zealand dollars rebounded strongly.¹
Federal Reserve’s Role
The Federal Reserve’s monetary policy decisions will likely play a significant role in determining gold prices. Markets are pricing in 57 basis points of rate cuts by the end of 2025. Fed Chair Jerome Powell’s upcoming testimony before Congress will be closely watched for further clues on rate cuts and their potential impact on gold prices.²
Analysts’ Outlook
Despite the short-term dip, many analysts still expect gold to rebound later this year. ANZ Bank predicts gold prices will consolidate before staging another rally toward $3,600 per ounce by year-end. Experts believe gold may find support around $3,300 and won’t fall below $3,000 in the short term .
