Gold Price Eases Slightly Following Middle East Ceasefire

The gold price saw a correction in the second half of June, declining from around $3,450 per troy ounce to a range of $3,255–$3,270. This represents a drop of approximately 5–5.5%, bringing prices back to levels last seen in early May.

A key driver behind this movement was the evolving situation in the Middle East. After the escalation of hostilities between Israel and Iran – including missile strikes on major cities such as Tel Aviv and Tehran – gold prices surged sharply, reaffirming gold’s traditional role as a safe haven during periods of geopolitical turmoil. However, the subsequent ceasefire announced by the US, following strikes on Iranian nuclear facilities, led to a reduction in risk sentiment and a pullback in prices in the financial market.

“As expected, gold initially gained, then temporarily lost the risk premium arising from the conflict. This premium amounted to about $150 per troy ounce,”

commented Max Baklayan of Tavex.

“The yellow metal reacted exactly as anticipated: it rises during geopolitical crises and retreats when tensions ease,” he added.

Fundamental Drivers Remain Intact

Despite short-term volatility, the long-term fundamentals supporting gold remain strong:

• Ongoing large-scale purchases by central banks – over 1,000 tonnes annually
• Rising uncertainty within the global financial system
• The gradual monetisation of public debt across many economies

Baklayan further noted:

“The recent correction is a reminder of my advice to approach gold as a long-term investment, with at least a five-year horizon. The best ally of a gold investor is the major trend. Price dips offer a valuable opportunity for those who have yet to enter the market or have been waiting for a more favourable entry point. Now is an excellent moment for such investors.”

Looking Ahead: US Economic Signals and Interest Rates

Attention now turns to the US, where upcoming economic data is expected to provide crucial signals for gold as investment decisions. Recent reports indicate a decline in consumer sentiment indices, suggesting a possible economic slowdown and mounting pressure on the labour market.

Analysts believe this could prompt the Federal Reserve to cut interest rates sooner than previously expected, a move that historically supports higher gold prices.