GOLD prices fell in early Asian trading on Monday (Jan 20) as easing tensions in the Middle East tempered safe-haven demand, while investors awaited Donald Trump’s inauguration and clarity on the incoming administration’s policies.
Spot gold dipped 0.4 per cent to US$2,690.81 per ounce by 0140 GMT. US gold futures dropped 0.5 per cent to US$2,734.90.
Hamas released three Israeli hostages and Israel released 90 Palestinian prisoners on Sunday, the first day of a ceasefire suspending a 15-month-old war that has devastated the Gaza Strip and inflamed the Middle East.
Market participants keenly awaited Trump’s inauguration later in the day, and his broad trade tariffs are expected to further ignite inflation and trigger trade wars, potentially increasing bullion’s safe-haven appeal.
Gold is used as an inflation hedge but higher interest rates dampen its appeal.
The future path of US interest rates will depend on how aggressively the incoming administration follows through on Trump’s policy pledges.
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The US Federal Reserve will likely hold interest rates steady on Jan 29 and resume cutting in March, according to a slim majority of economists polled by Reuters.
Gold stocks in Comex-approved warehouses have jumped by a third in the past six weeks as market players sought deliveries to hedge against the possibility of import tariffs from Trump.
Comex gold speculators raised net long positions by 17,994 contracts to 212,494 in the week to Jan 14, data showed.
Elsewhere, gold discounts in India widened to six-month highs this week as a rise in domestic prices dampened demand and jewellers awaited the annual federal budget, while physical gold demand in China was solid ahead of the Chinese New Year festival.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.19 per cent to 879.12 tonnes on Friday from 868.78 tonnes on Thursday.
Spot silver fell 0.7 per cent to US$30.13 per ounce, palladium eased 0.3 per cent to US$944.25 and platinum shed 0.2 per cent to US$940.05. REUTERS
