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Safe-haven gold loses momentum as Middle East tensions ease
Gold prices declined
sharply after the announcement of a ceasefire between Israel and Iran. The
safe-haven demand has weakened as geopolitical risk eased.
De-escalation triggers short-term selloff
The gold price fell by up to 2% in
overnight trading, hitting a low of $3,300 per ounce. The announcement by U.S.
President Donald Trump regarding a complete ceasefire between Israel and
Iran triggered the pullback. Although the market later recovered to around
$3,320, the retreat marked a significant intraday correction.
However, despite the correction, gold
remains up over 25% year-to-date. This surge reflects investor appetite for
safe-haven assets amid persistent global instability, trade tensions, and
inflationary pressures. Central bank purchases have also played a critical role
in supporting gold’s long-term rally.
Risk-on sentiment erodes bullion momentum
Peter Grant of Zaner Metals attributes the
price drop to a risk-on shift. As tensions de-escalate, investors reduce
exposure to bullion in favor of riskier assets. This behavioral shift reflects
decreased demand for defensive hedging in metals markets.
Still, technical support remains strong at
$3,300, with further consolidation likely near $3,250. The resilience of gold
amid geopolitical and monetary uncertainty signals that long-term bullish
fundamentals remain intact.
Implications for recycled gold and secondary markets
While the gold price experiences volatility,
the secondary market for recycled gold may face pricing pressure. Lower
spot prices can dampen scrap inflows temporarily. However, sustained
year-to-date gains continue to offer strong margins for recyclers and refiners.
Market participants should closely monitor
central bank policy shifts and regional geopolitical developments. These
factors remain critical to near-term gold price dynamics and investment flows
across the broader metal complex.
ScrapInsight Commentary
The gold price correction underscores the fragile balance between geopolitics and investor sentiment. While ceasefire news triggered a short-term retreat, the sustained demand from central banks and macroeconomic volatility supports a bullish long-term outlook. Recycled gold flows may momentarily soften but remain robust overall.
