Gold prices fell in Tuesday's trading session but still maintained above the lowest level in more than a month and a half set in the previous session, as the market waited for new developments related to US-Iran tensions after President Donald Trump temporarily postponed the plan to attack Iran.
As of 4:05 PM Vietnam time, spot gold prices fell 0.5% to 4,539.38 USD/ounce. US gold futures for June delivery fell slightly 0.2% to 4,547.70 USD/ounce.
Previously, gold prices fell sharply by 2.4% on Friday - the largest daily drop since March 26 and continued to plummet in the first session of the week to 4,479.54 USD/ounce, the lowest level since March 30, as concerns about rising inflation put strong selling pressure on the global bond market.
However, gold recovered slightly at the end of Monday's session and closed slightly up.
Mr. Ilya Spivak - Head of Global Macroeconomics at Tastylive said that the market is currently fluctuating between inflationary concerns and the psychology of waiting for further monetary policy signals from the Fed.
According to him, investors are currently focusing their attention on the minutes of the Fed meeting in April scheduled to be released on Wednesday to find more clues about interest rate prospects.
Meanwhile, the bond market temporarily stabilized again after a previous strong sell-off when Mr. Trump said he had temporarily postponed the plan to attack Iran to spend time on negotiations related to the new peace proposal that Tehran sent to Washington.
Oil prices also fell more than 2% in the session, thereby helping to cool down some of the fears of inflation in the market.
Although gold is often seen as an inflation hedging tool, high interest rates put pressure on the precious metal because this asset does not generate profits.
In another development, the White House said that Mr. Kevin Warsh will officially be sworn in as Fed Chairman this Friday.
Mr. Warsh will take over the Fed in the context that the US central bank is facing increasing inflationary pressure, which could make interest rate cuts more difficult even though President Trump has repeatedly expressed his desire for the Fed to ease monetary policy.
On other precious metals markets, spot silver prices fell 2.1% to $76.02/ounce. Platinum prices fell 0.5% to $1,969.05/ounce, while palladium fell 1.5% to $1,397.23/ounce.
