The dollar’s strength and the US Treasury yields increased on Monday, reducing demand for gold.
On Monday, the easing of concerns about a larger conflict in the Middle East dampened demand for yellow metal as a safe haven.
The December COMEX gold contract was trading at $2.744 an ounce as of the date this article is written, a 0.4% decrease from its previous closing price.
Gold prices are in red but experts still believe the precious metals will continue to rise. Since the beginning of this year, gold has increased by more than 30 percent.
After Israeli strike, tensions have eased
After Israel’s attack on Iran at the weekend, geopolitical tensions have eased.
Israel avoided targeting Iran’s nuclear and oil facilities which could have escalated conflict.
Three waves of missiles fired before dawn Saturday morning against sites and factories near Tehran, western Iran and other locations.
Iran has threatened retaliation, although the country is said to have downplayed any impact that Israeli attacks may have had. Gold prices have been boosted by the prospect that Israel would strike Iranian oil and nuclear installations.
The gold price fell because Israel’s strike did not disrupt any Iranian energy or nuclear sites.
Gold is limited to the downside
Gold prices may have declined on Monday but experts remain confident that the yellow metal can still rise.
The price of gold has fallen from its record high $2,772.60 an ounce earlier in the month.
Fxstreet.com reported that the downfall of gold could be contained due to the geopolitical tensions surrounding the US Presidential election.
The purchase of yellow metal by central banks around the world has boosted the price over the past two years.
Fxstreet analysts believe gold prices will correct to a $2,670-$2,700 an ounce price level this week.
Alexander Kuptsikevich is an analyst with FxPro Financial Services Limited. He said:
The strong trend will not be broken. A decisive breakdown below would make us more cautious, anticipating a further pullback.
Palladium rally has potential
Palladium, the most valuable precious metal, was the asset that performed best last week.
Prices rose after the US called on G7 nations to implement sanctions against the Russian supply of palladium. Russia provides about 40% of all palladium in the world.
Palladium quickly broke through its moving averages of 50 and 200 days at the beginning of October. According to Fxstreet, in October, buyers were encouraged by the approaching of these levels.
Kuptsikevich stated in the report that:
Palladium is a metal with low liquidity, compared to other precious metals like gold or silver. Therefore, price fluctuations are likely. The next easy and quick target is the $1200 peak, which was reached at the end last year, from current palladium levels around $1170.
If the 200-day moving median is broken, prices could rise even higher.
Kuptsikevich added that this could mean the return of an explosive rally between late 2018 and March 2020.
Palladium futures at the New York Mercantile Exchange are currently around $1200 an ounce. This is a 9% increase since last week.
The post Gold Prices Decline as Dollar Strengthens but Downside is Limited; Palladium Shows Greater Upside Potential may be updated as new developments unfold.
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