Gold slips to 1-month low as geopolitical risks ease

Gold prices in India declined on Monday, June 30, 2025, tracking weakness in global markets as improving sentiment around U.S. trade deals reduced the metal’s safe-haven appeal. On the Multi Commodity Exchange (MCX), August gold futures settled at ₹95,470 per 10 grams. Internationally, spot gold was trading at $3,390 an ounce around 11:00 AM IST. The yellow metal lost about 3% last week, weighed down by renewed investor confidence in the global economy and hopes of easing geopolitical tensions.

Rahul Kalantri, VP–Commodities, Mehta Equities Ltd, said, "Precious metals witnessed a sharp correction amid geopolitical easing and global market optimism. The ceasefire between Israel and Iran deflated the war risk premium, triggering a pullback in gold prices. Gold slipped to its lowest level in a month. Additional pressure came from fading hopes of near-term U.S. Fed rate cuts. However, the downside is being cushioned by dollar weakness and rising tensions in the Russia-Ukraine region."

Dr. Renisha Chainani, Head of Research at Augmont, added, "Investors applauded the news of the U.S. trade agreement with China, as well as those with the EU, South Korea, and Vietnam. The move away from safe havens coincides with a period of de-escalating global tensions on all fronts: war worries are subsiding, tariffs have reached a standstill and are still in the grace period before being considered once more."

Iran has demonstrated flexibility and a preference for diplomacy in geopolitics, as seen by its UN representative's statement that Tehran is amenable to establishing a regional nuclear consortium should an agreement be reached with Washington. The likelihood that the Israel-Gaza conflict would finish in two weeks, according to Al Arabiya, adds to the positive atmosphere.

Additionally, the UK government said in a press release today that the trade agreement between the U.S. and the UK had formally entered into force. A 10% tariff quota has been lowered for UK automakers exporting to the U.S. Ten percent tariffs on products like engines and aircraft parts will be eliminated for the UK aerospace industry. The allure of gold as a safe haven is waning due to the more tranquil geopolitical environment. It appears that traders are more concerned with pursuing yield than they are with maintaining hedges.

The release of the PCE report in July or September was another major factor that prompted investors to place bets on a potential rate drop by the Fed. Prices increased 2.7% in May compared to the previous year, which was slightly more than the 2.6% forecast, according to the Fed's preferred inflation indicator.

However, "the Federal Reserve will likely lower rates more frequently and sooner than anticipated due to some U.S. statistics suggesting a weaker economy, which caused the dollar index to retrace last week to three-year lows below the 98 level. A week ago, traders were pricing in cuts of 46 basis points; now, they are pricing in 65 basis points by year-end," said Chainani.

"The announcement by U.S. President Donald Trump that the United States was terminating trade negotiations with Canada and that he would think about bombing Iran once more damaged risk appetite and caused equities to fall. The dollar has weakened further due to reports that U.S. President Donald Trump may name a successor to Powell in the upcoming months. By serving as a shadow chair before Powell's tenure ends in May, an early nomination might weaken Powell's influence. The future Fed chair is anticipated to be more dovish," added Chainani.

"When combined, these messages demonstrate Trump's unpredictable nature and the ease with which any presumptions incorporated into markets can be disproved. Trump also indicated he might think about bombing Iran again if Tehran is enriching uranium to alarming levels, harshly insulted Iran's Supreme Leader Ali Khamenei, and cancelled plans to relax sanctions on Iran," noted Chainani.

"Gold has support at $3,264–3,245, while resistance is at $3,315–3,335," said Kalantri.