Gold prices (XAUUSD:CUR) extended their losses on Tuesday, shedding more than 2% in the previous session to hit their biggest intraday fall in over a year. This decline was driven by improved risk appetite, which dampened the safe-haven appeal of gold.
U.S. stocks rose on Monday after a market sell-off in the previous session, as tensions in the Middle East eased, and investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the U.S. economy’s health. Gold is typically seen as a hedge against inflation and geopolitical turmoil.
Gold’s aggressive rally since the mid-February low is currently being challenged by a long-overdue and relatively aggressive, but healthy correction, according to Ole Hansen of Saxo Bank. This correction, he said, will help determine the real level of underlying demand.
Geopolitical tensions and robust central bank buying propelled gold to a record intraday high of $2,448.80/oz on April 12. The front-month contract gold for April delivery posted a new record close on Friday at $2,398.40/oz.
Hansen further noted that, like gold, silver is also undergoing a relatively aggressive correction, with the selling being amplified by its recent failure to break above $30 per ounce, the 2020 and 2021 high.
Spot silver (XAGUSD:CUR) dropped 2.24% to $26.70 per ounce by 6:04 am ET.
Despite these setbacks, geopolitical risks related to Russia/Ukraine and the Middle East, along with strong retail demand in China, remain positive factors for gold.
Oil prices, meanwhile, exhibited mixed movements as traders awaited a new round of U.S. economic data. Brent Crude (CO1:COM) futures rose +0.22% to $87.19 a barrel, while U.S. crude (CL1:COM) fell -1.00% to $82.02.
Venezuela’s state-run oil company PDVSA plans to increase digital currency usage in its crude and fuel exports as the U.S. reimposes oil sanctions on the country, Reuters reported. This move is likely to make it more difficult for Venezuela to increase oil output and exports, as companies will have to wait for individual U.S. authorizations to do business with the country.
