Gold prices retreated as the dollar recovered and optimism grew about a ceasefire between Russia and Ukraine.
Gold markets witnessed a decline in prices today, Tuesday, May 20th, driven by a slight increase in the value of the US dollar, in addition to growing hopes of a ceasefire between Russia and Ukraine, reducing demand for the yellow metal as a safe haven.
According to data, the price of gold in spot trading fell by 0.4% to reach $3215.59 per ounce, while gold futures in the US market dropped by the same percentage to $3220.70.
The US dollar showed a limited recovery after hitting its lowest levels in over a week in the previous session, negatively impacting gold demand from investors dealing in other currencies.
Kyle Roda, market analyst at "Capital.com," stated that markets are experiencing exaggerated reactions following the downgrade of US sovereign debt credit ratings, with signs of hope for a possible ceasefire between Russia and Ukraine.
Roda added: "We see buying operations on dips that push the price below $3200, but I lean towards the continuation of the downward trend, especially if geopolitical risks decrease further."
It is worth noting that US President Donald Trump had a phone call yesterday, Monday, with his Russian counterpart Vladimir Putin, during which he indicated that the two countries will immediately begin negotiations for a ceasefire.
Gold, considered a safe asset in times of geopolitical and economic tensions, has shown strong gains this year, jumping by about 23% since the beginning of 2023.
In a related context, Federal Reserve officials are cautiously dealing with the repercussions of the credit rating downgrade and market volatility amid ongoing economic uncertainty. Several Fed officials are expected to speak today, Tuesday, providing further insights into future monetary policy.
Markets currently expect the Fed to cut interest rates by at least 54 basis points by the end of the year, with expectations for the first cut to begin in October.
In addition to gold, silver fell in spot trading by 0.6% to $32.17 per ounce, while the price of platinum remained stable at $998.04. On the other hand, palladium lost 0.3% to reach $971.84.
