Gold prices fall as profit-taking, easing geopolitical risks weigh

NEW YORK: Gold fell more than 1percent on Friday as investors booked profits after recent record highs, while signs of easing geopolitical tensions further dampened the metal’s safe-haven appeal.

Spot gold was down 0.5 percent at USD4,592.29 per ounce as of 01:39 p.m. ET (1839 GMT), after falling as low as USD4,536.49 earlier in the session.

However, the metal is poised for its second consecutive weekly gain, of about 1.9percent, after scaling a record peak of USD4,642.72 on Wednesday. US gold futures for February delivery settled 0.6percent lower at USD4,595.40. “It’s a general retreat in the commodity complex after weeks of aggressive gains, with some profit-taking. The de-escalation of Middle East tensions has also removed some of the geopolitical premium in gold and other metals, especially silver,” said Marex analyst Edward Meir.

Geopolitical tensions appeared to ease as protests in Iran subsided, while US President Donald Trump took a wait-and-see approach and Russia’s President Vladimir Putin moved to mediate in Iran and de-escalate the situation.

On the trade front, the US and Taiwan struck a deal on Thursday that lowers tariffs on many of Taiwan’s semiconductor exports and channels new investments into US tech, and risks infuriating China.

Meanwhile, the Federal Reserve is expected to keep rates unchanged through the first half of the year, with a first 25-basis-point cut projected in June, as per data compiled by LSEG.

Safe-haven gold tends to do well during times of geopolitical and economic uncertainty, as well as when interest rates are low. “I still think we have a chance of getting to USD5,000 sometime this year, punctuated with these big corrections in the meantime,” Meir said.

Spot silver shed 2.9 percent to USD89.65 per ounce, although it was headed for a weekly gain of over 12percent after hitting an all-time high of USD93.57 in the previous session.

JP Morgan said in a note on Friday that mounting risks from loosening ex-US supply and ETF outflows to softer industrial demand and tighter Chinese trading curbs, leave silver vulnerable to a sharp correction. Spot platinum dropped 3.3percent to USD2,330.67 per ounce and headed for weekly gain, while palladium lost 0.6percent to USD1,790.78 per ounce.