Gold Drops as Middle East Tensions Ease; Dollar Gains on Election Uncertainty

Gold prices slipped from recent highs in Asian markets on Monday as reduced fears of a broader Middle Eastern conflict softened safe-haven demand for the metal. Traders turned their attention toward the U.S. dollar, with rising demand spurred by upcoming U.S. elections and increased political uncertainty in Japan, where the ruling Liberal Democratic Party’s coalition lost its parliamentary majority.

Spot gold declined by 0.7% to $2,729.65 per ounce, while December gold futures dropped 0.5% to $2,741.80 per ounce.

Middle East Tensions Subside After Israeli Strike

Concerns of an expanding conflict in the Middle East eased after Israel’s weekend strike refrained from targeting Iran’s oil and nuclear sites, with Tehran downplaying the impact. The initial October attack by Israel on Iranian interests had been a significant driver of safe-haven demand for gold, pushing it to near-record highs over recent weeks. Despite the easing tensions, gold remains close to these recent peaks, reflecting ongoing geopolitical anxieties.

Increased uncertainty surrounding the U.S. presidential election also suggests that safe-haven demand for gold could persist. Recent polls indicate a closely contested race between Donald Trump and Vice President Kamala Harris, although the dollar currently benefits more directly from the uncertainty.

Precious Metals and Copper Prices Fall Amid Dollar Strength

Other precious metals saw declines due to the dollar’s strength. Platinum futures fell 0.8% to $1,026.90 per ounce, while silver futures dropped 1% to $33.435 per ounce.

Among industrial metals, copper prices also retreated as markets awaited key economic data. London Metal Exchange benchmark copper futures dropped 0.6% to $9,520.50 per ton, with December futures down 0.7% to $4.3373 per pound. The red metal has faced persistent declines, weighed down by underwhelming stimulus measures from top copper importer China. Over the weekend, China reported a substantial drop in September’s industrial profits, further impacting copper demand. Key data, including PMI readings from China and GDP figures from the U.S. and eurozone, are expected this week, with the PCE price index, the Federal Reserve’s favored inflation metric, also in focus.