Gold prices fell during trading in Asia following news of the Ceasefire talks between Israel and Hezbollah. The news, anticipated by Israeli media, signaled a potential reduction in tensions in the Middle East, fueling sales on so-called safe haven assetsalthough it was partly offset by the escalation of tensions between Russia and Ukraine since last week.
Gold prices
The spot gold price fell 1.6% to $2,671.63 an ounce, while gold futures expiring in December fell 1.46% to $2,695.70 an ounce. The value of the precious metal remains distant from the latest historical record reached just a hair’s breadth from $2,790 at the end of October, but maintains a gain from the beginning of the year equal to +36%
The situation in the Middle East
Some Israeli government sources reportedly told Israeli public television Kan, that the agreement for the truce in Lebanon “is closed” and Prime Minister Benjamin Netanyahu is currently thinking about how to explain the agreement to public opinion. At the center of the discussion, the sources explain, will be the freedom of action of the IDF in the border area between Syria and Lebanon. Also according to Israeli TV, Israel has received guarantees from Washington on freedom of action in the event of violation of the agreement.
Support comes from the weakness of the dollar
The rise in the price of gold in the last period was triggered by the persistent dollar weaknessin response to the more accommodating policy of Fedwhich he has already accomplished two interest rate cuts in autumn. Another cut of 25 basis points by the US central bank is also expected in December, although the strategy has become less clear after Donald Trump’s victory in the elections. The dollar indexan indicator of the performance of the greenback against a basket of the major world currencies, dropped 0.43% this morning at 107.04 points, although the euro fell this morning to USD 1.04, also awaiting another BBE cut.
The situation in Eastern Europe remains tense
Gold posted strong gains last week, on the back ofintensifying tensions between Russia and Ukraine and the threats of the Russian President, Vladimir Putinwhich threatened the use of nuclear weapons and the expansion of the conflict worldwide. It is likely that these tensions will continue this week, while few avenues are open to resolving the matter, and for this reason the price of the precious metal is supported by these tensions and could record a further reversal towards the highs in the coming days.
