Gold prices retreat as Iran-Israel tensions ease

Bullion prices slip as Middle East tensions ebb, US rate hike bets linger.

Gold prices retreated in Asian trading on Monday as concerns over a broader military conflict in the Middle East eased, curbing safe-haven demand for the precious metal. Meanwhile, expectations of higher interest rates in the US continued to weigh on the non-yielding asset.

Spot gold (XAU/USD) fell to $2,360.16 per ounce by 09:15 GMT, paring a surge above $2,400 seen on Friday amid reports of an Israeli attack on Iran. However, Tehran downplayed the impact, outlining no immediate retaliation plans, which alleviated fears of an escalation.

The dollar index steadied near five-month highs, while US Treasury yields advanced as traders remained positioned for the Federal Reserve to keep interest rates higher for longer. String March inflation data and hawkish Fed rhetoric have largely priced out chances of a rate cut in June, piling pressure on gold prices due to the increased opportunity cost of holding the metal.

Additionally, bullion’s recent surge into overbought territory rendered gold vulnerable to profit-taking by investors.

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