Gold drops below $4,500 as Middle East ceasefire erodes safe-haven demand

COMEX gold fell below $4,500 an ounce, dropping 2.8% to $4,453, as a stable Middle East ceasefire reduced geopolitical risk premiums that had built up over the past quarter.

"The removal of the geopolitical bid has triggered a technical breakdown below the $4,500 support level that held for three weeks," said a commodities strategist tracking COMEX flows. Silver held near $76.59 an ounce with a neutral-to-bearish structure, according to exchange data.

Gold has now declined 19% since its January peak, with the ceasefire removing the primary driver that had pushed the metal to record levels above $5,500 earlier this year. COMEX open interest data shows liquidation pressure building as traders unwind safe-haven positions, with total open interest falling approximately 8% over the past two weeks. In India, the world's second-largest gold consumer, 24-karat gold was priced at Rs 16,360 per gram in Bengaluru, while 99.9% purity bullion fell Rs 2,800 to Rs 1,62,400 per 10 grams, according to the All India Sarafa Association. On the Multi Commodity Exchange, gold contracts for June delivery rose Rs 426, or 0.27%, to Rs 1,59,105 per 10 grams, reflecting a divergence between international and domestic pricing as Indian importers adjusted to the global decline. The previous session had seen gold settle at Rs 1,65,200 per 10 grams before the ceasefire-driven selloff.

The next support level for COMEX gold sits at $4,350, a zone last tested in April. The Federal Reserve's May meeting minutes flagged potential rate hikes, adding further headwinds for non-yielding assets. The US dollar's recent weakness has provided some offset, but traders said the primary driver remains the dissipation of the Middle East risk premium. US President Donald Trump had raised market hopes for a deal with Iran, which could lead to the reopening of the Strait of Hormuz — a prospect that weighed on oil prices and, by extension, gave gold a lift from an inflation perspective that has now reversed. A sustained break below $4,350 would open the path toward $4,200, the 200-day moving average level.

Silver faces additional pressure beyond gold's decline. The metal's dual role as both a monetary and industrial commodity leaves it exposed to slowing global manufacturing activity, with the gold-to-silver ratio widening to approximately 58:1 from 52:1 at the start of the year. Silver at $76.59 remains above its 200-day moving average near $72, but the neutral-to-bearish structure suggests further downside risk if gold continues its slide toward $4,350. Among precious metals peers, platinum and palladium have also declined this week, reflecting broad-based liquidation across the complex rather than metal-specific factors. Gold's 19% decline from its January peak compares with a 14% drop in the Bloomberg Commodity Index over the same period, showing the magnitude of the safe-haven unwind relative to the broader commodities market.

This article is for informational purposes only and does not constitute investment advice.