Spot gold falls as Israel-Iran truce lifts risk appetite, U.S. data in focus

June 25, 2025 (MLN): Gold prices declined on Wednesday as improved risk appetite followed a ceasefire between Israel and Iran, while investor focus shifted toward upcoming U.S. economic data.

Spot gold dropped 1.64% or $55.49 to $3,323.65 per ounce, after touching a more than two-week low on Tuesday.

In contrast, U.S. gold futures edged up 0.2% to $3,341.40.

According to UBS analyst Giovanni Staunovo, the easing of Middle East tensions and reduced demand for safe-haven assets contributed to gold’s retreat from earlier gains.

However, he noted that ongoing uncertainty over Iran’s nuclear program may still support gold allocations.

The ceasefire, brokered by U.S. President Donald Trump, appeared to hold steady on Wednesday, a day after both Iran and Israel indicated an end to their air conflict.

The dollar index remained weak as investors embraced risk following the truce, making dollar-priced gold more appealing to holders of other currencies.

A report also indicated that global central bank reserves are gradually shifting from the dollar toward gold, the euro, and China’s yuan amid geopolitical uncertainties.

Gold, traditionally viewed as a safe-haven asset, tends to perform well during times of instability and in low-interest-rate environments.

Investors are now awaiting the U.S. first-quarter GDP data set for release on Thursday to assess economic momentum, followed by Friday’s Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation metric.

Staunovo added that weaker-than-expected PCE data could intensify pressure on the Fed to cut rates, benefiting gold.

Meanwhile, Fed Chair Jerome Powell warned Congress that higher tariffs could lift inflation starting this summer.

Separately, data showed U.S. consumer confidence unexpectedly declined in June.