Gold prices saw a notable decline during trading on Thursday, as the record-breaking rally that had lasted for three consecutive sessions came to an end. This decline was primarily driven by profit-taking as investors sought to capitalize on recent price gains. The drop coincided with shifts in market sentiment influenced by statements from US President Donald Trump regarding the policies of the Federal Reserve (the US central bank) and the Iranian nuclear issue, which diminished the precious metal's appeal as a safe haven at present.
Details of price movements in global markets
According to the latest data as of 1:37 GMT, spot gold prices fell 0.6% to settle at $4,594.66 per ounce. US gold futures were not immune to this decline, with February delivery contracts dropping 0.8% to $4,599.50. Analysts suggest this price correction is a natural technical movement following the sharp rises seen in the markets over the past few days.
Performance of other precious metals
The downward trend extended to other precious metals, with silver suffering sharp losses in spot trading, falling 5.3% to $87.88 per ounce. Platinum also declined by 4% to $2,288.05 per ounce, while palladium dropped 2.5% to $1,753.53 per ounce. This widespread decline reflects a cautious sentiment among precious metals traders, prompting them to shift their capital towards other investment vehicles or temporarily liquidate their portfolios.
Influential economic and political context
This decline comes as markets react to the political and economic landscape in the United States. Historically, statements by US presidents regarding the Federal Reserve's monetary policy have been a significant factor in shaping expectations for interest rates and the dollar. When expectations point to political or monetary stability, investors tend to reduce their holdings of gold, which does not generate cyclical returns, in favor of income-generating assets such as bonds or stocks.
Furthermore, statements regarding Iran have played a role in easing geopolitical concerns, which typically reduces the risk premium added to the price of gold. The precious metal usually thrives during times of tension and war as a hedge, and any sign of easing crises or stabilizing the situation pushes prices toward a downward correction.
The importance of the event and its expected impact
This price movement is of particular importance to investors and economic policymakers, as it reflects the markets' heightened sensitivity to US political news. Internationally, the decline in gold could ease pressure on the local currencies of countries that import the metal, while investors closely monitor technical support levels to determine whether this drop is merely a brief pause before a rebound, or the beginning of a broader downward trend dependent on upcoming US economic data.
