By John Biju and Kavya Balaraman
(Reuters) -Gold prices fell 2% on Thursday, dipping below the $4,000/oz milestone breached for the first time in the previous session, as the dollar pushed higher and gold investors booked profits following a ceasefire deal between Israel and Hamas.
Silver eased from its record high of $51.22 per ounce as well, pressured by the same factors as gold.
Spot gold fell nearly 2% to $3,959.48 per ounce by 01:53 p.m. ET (17:53 GMT). U.S. gold futures for December delivery fell 2.4% to settle at $3,972.6.
Silver was flat at $48.93 per ounce.
The dollar index was up 0.5% near a two-month high, making dollar-priced bullion more expensive for overseas buyers. [USD/]
“Speculators are taking some gold chips off the table as the Gaza ceasefire takes effect since it reduces the temperature in a historically volatile region,” said Tai Wong, an independent metals trader.
Israel and Hamas signed an agreement on Thursday to cease fire, the first phase of U.S. President Donald Trump’s initiative to end the war in Gaza.
“Gold and silver may need to consolidate further, but the primary drivers of the rally, reserve diversification and large, growing global sovereign debt, remain entirely valid and keep the bullish outlook intact,” Wong said.
Bullion surged past $4,000 per ounce for the first time on Wednesday, reaching a record high of $4,059.05. The non-yielding asset, traditionally considered a hedge during geopolitical and economic uncertainty, has gained about 52% this year.
Its rally has been fueled by geopolitical tension, robust central bank buying, rising ETF inflows, expectations of U.S. rate cuts and tariff-related economic uncertainties.
Minutes of the U.S. central bank’s September meeting, released on Wednesday, showed Fed officials agreeing that risks to the U.S. job market were high enough to warrant a rate cut, but remained wary amid stubborn inflation.
The Fed resumed its rate-cutting cycle in September, with a 25 basis point cut.
Traders see a 25 basis point cut in October and another in December, with a 95% and 80% chance, respectively. [FEDWATCH]
Silver has risen 69% this year, driven by the same macroeconomic forces fueling gold’s rally and tight supply in the spot market.
“Liquidity in the London silver market is thin due to ETF buying and metal still being moved to the U.S.,” a precious metals trader said.
India’s Kotak Mahindra has temporarily halted new investments in silver ETF amid a shortage.
Platinum eased 2.4% to $1,622.25 and palladium dropped 1.7% to $1,425.36.
(Reporting by Anushree Mukherjee, Kavya Balaraman and John Biju in Bengaluru; Additional reporting by Sarah Qureshi and Anjana Anil; Editing by Arun Koyyur, Kirsten Donovan, David Gregorio and Sahal Muhammed)
