Gold Price Retreats Below US$2,400 After Record-Setting Run

Despite ongoing geopolitical concerns, gold has pulled back this week from April 12's new all-time high.

As of 3:02 p.m. EDT on Wednesday (April 17), spot gold was trading at US$2,374.50 per ounce, below its record peak of US$2,431.29. Concurrently, US gold futures declined by 0.5 percent to hit US$2,396.70.

Last weekend, Iran launched a direct assault on Israel, purportedly in retaliation for an Israeli airstrike that targeted an Iranian diplomatic facility in Damascus, Syria, on April 1. Israel is currently weighing its response.

Gold is widely viewed as a safe-haven asset, and could pick back up if tensions increase again.

"Geopolitical uncertainty continues to support gold and if there is any escalation in the situation, then prices could move towards the US$2,500 range," Phillip Streible, chief market strategist at Blue Line Futures, told Reuters on Wednesday. "Gold prices will only come lower if central banks stop buying or if investors go back to a risk-on phase."

Experts are also closely watching the US Federal Reserve, whose next meeting is scheduled to run from April 30 to May 1. The central bank was previously expected to begin cutting interest rates in June, but now may not do so. Chair Jerome Powell said on Tuesday (April 16) that the Fed needs to see further progress on reaching its goal of 2 percent inflation.

"The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence," he said during a panel at a forum on US-Canada economic relations.

Strong US retail sales data for March, which surpassed expectations with a month-on-month growth rate of 0.7 percent, has bolstered confidence in the American economy, driving bond yields higher and strengthening the US dollar.

Meanwhile, 10 year Treasury yields rose to 4.61 percent on Monday (April 15), increasing the opportunity cost of holding gold as a non-yielding asset. For its part, the US Dollar Index hit a fresh five month high of 106.16.

From a technical perspective, gold is correcting, with momentum oscillators indicating overheated conditions.

Even with this retreat, gold remains historically high, reflecting ongoing uncertainties in global markets and investors' search for safe-haven assets as geopolitical worries and economic volatility remain.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.