Gold Price News: Easing tensions influence the market

The gold price has fallen to USD 2,625 per troy ounce today, which corresponds to a reduction of USD 85 or around 3.14% compared to the last trading day. This decline reflects a cooling of geopolitical tensions and a change in risk assessment on the markets, which is particularly evident in the context of the Middle East and the war in Ukraine. Indications of a possible adjustment of US interest rate policy by the Federal Reserve have also influenced the dynamics of the precious metals market.

The possibility of a ceasefire between Israel and the Lebanese Hezbollah militia has significantly eased geopolitical tensions in the Middle East. According to the Israeli ambassador to the US, both sides could announce an agreement in the coming days. Reports from Axios suggest that both parties have already accepted the terms. These developments are reducing the demand for gold and have led to a significant drop in prices today.

Bart Melek, global head of commodity strategy at TD Securities, explains: “The relationship between risk and gold is usually positive. When the risk decreases, the attractiveness of gold also decreases.” This is clearly evident in current market activity, as traders are liquidating positions that they had previously built up as a hedge.

Despite escalating events in the Ukraine war, support for the gold price remains limited due to geopolitical risks. In recent days, Russian forces have once again massively attacked Ukrainian infrastructure, while Ukraine has reportedly hit strategic targets in Russia - including Kursk airport.

Pope Francis commented on the situation, sharply criticizing the “arrogance of the aggressors” and drawing parallels with the Middle East. While these events are weighing on the geopolitical environment, the gold market is showing relative stability, indicating the lower market weighting of these developments.

A key driver for the decline in the gold price is the expectation of a possible stabilization of US interest rate policy under the designated Trump administration. The nomination of Scott Bessent as Treasury Secretary is perceived as moderate and reassures the markets about an inflationary escalation. Giovanni Staunovo, commodities analyst at UBS, explains: “The choice of Bessent points to a less aggressive trade war and reduces inflationary pressure, which makes gold less attractive as a hedge.”

At the same time, the robust US economic performance has weakened speculation about further interest rate cuts. Important economic data, including the minutes of the Federal Reserve's November meeting and consumer spending, could provide further clues as to the future direction of monetary policy. Such developments have a significant impact on the appeal of gold as an asset class.

The falling gold price is also influenced by economic developments such as those in Argentina. President Javier Milei's rigorous austerity measures have reduced inflation from 280% to 193%. In contrast to this positive development, however, poverty is on the rise throughout the country. More than half of the population lives below the poverty line. This development reflects the difficult global economic conditions, which are prompting investors to focus increasingly on lower-risk investments.

Despite the recent decline, the gold market remains sensitive to geopolitical and macroeconomic developments. While the ceasefire in the Middle East and more moderate monetary policy expectations could weigh on the price in the short term, uncertainties in the Ukraine war and possible long-term effects of US economic policy should keep the precious metal attractive as a stabilizing investment. Analysts such as Goldman Sachs continue to forecast upside potential for 2025 - especially with continued central bank purchases and a potentially more expansionary US monetary policy. Investors should keep a close eye on upcoming economic data and political developments, as these will have a significant impact on market sentiment and therefore the momentum of the gold price.