Gold’s safe-haven appeal is waning due to easing tensions between Israel and Iran, and the Federal Reserve’s expected neutral monetary policy stance.

Gold prices fell significantly in early US trade on Tuesday, as the geopolitical situation in the Middle East took a sudden and unexpected turn toward de-escalation of military conflict, at least for the time being.

In the opening hours of trade, Gold fell below $3,300, down by over 2% making a two-week low, as markets assessed the sustainability of the ceasefire between Iran and Israel. Gold is down over 1% in the last 1-month, currently trading at $3,307.

Analysts suggest that $3,300 an ounce is a crucial support level, and a break below it could lead to $3,000 as a major downside target.

Tehran and Tel Aviv had agreed to a ceasefire after trading strikes since last week, but reports of new missile launches and strike orders cast doubt on the truce’s validity and fueled fears that the combat might resume shortly.

This came after an exchange of controlled strikes between Iran and the US reduced collateral damage and signaled a time of apparent de-escalation, decreasing the attractiveness of gold’s safety and preventing the metal from retesting record highs of $3,500 set in late April.

Meanwhile, key FOMC members stated that they are not averse to a rate decrease at the Fed’s upcoming July meeting, citing indicators of a weakening job market and disinflation in consumer prices.

Analysts predict that despite the Federal Reserve’s neutral stance, interest rates may decrease soon, which could support gold prices through the summer.

Gold rate today in India is Rs 97,900. Silver prices too fell below $36 on Tuesday and trades at $35.3, down over 2% from the previous day’s close.

Last week, silver rocketed to over 13-year highs, spurred by safe-haven demand—particularly as an alternative to gold—as well as indicators of robust industrial demand and restricted supply. However, the advance has subsequently slowed, with recent price weakness ascribed to profit-taking and liquidity-driven selling as investors sought to offset losses in other asset classes.

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