Gold prices declined in European trade on Tuesday on profit-taking, after the precious metal touched a record high on Monday while investors shun off major positions in wait for the Israeli response to the latest Iranian attack.

Gold futures are pressured by higher US treasury yields as hot retail sales data hurt the odds of Fed interest rate cuts in June and July. 

Now investors await important developments today, including Fed Chair Jerome Powell’s speech on North America’s economic directions.

Prices 

Gold prices fell 0.8% to $2364 an ounce, with a session-high at $2392, after closing up 1.6% on Monday, marking a record high at $2383 on haven demand. 

The precious metal hit a record high at $2431 an ounce on strong demand from investment funds and central banks.

Israeli Response 

Israel’s military officials asserted that Israel is preparing for a response to the attack launched by Tehran last week, while European and US officials called for restraint. 

Markets are waiting closely for the next Israeli step, as western and Arab countries try to convince the Israeli government that opening a front with Iran will carry negative consequences for Israel.

US Yields 

US 10-year treasury yields rose 0.8% on Tuesday to near a five-month high at 4.663%, pressuring non-yielding assets. 

The developments came after US retail sales data in March, which were far above estimates, indicating strong growth in the first quarter. 

The data sowed doubts about the timing of the next Federal Reserve interest rate cut as the economy continues to prove resilient. 

US Rates

Following the retail sales data, the odds of a Fed interest rate cut in June fell to 23%, while the odds of such a cut in July slid to 48%. 

San Francisco Fed President Mary Dale said on Monday that there’s no urgent need to cut interest rates.

Powell 

Federal Reserve Chair Jerome Powell is scheduled to participate in a fireside chat about economic trends in North America at the Wilson Center’s Washington Forum, in Washington DC, later today. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 1.73 tonnes yesterday to a total of 828.45 tonnes, the highest since April 4. 

Cryptocurrencies were mixed on Monday amid a slight rise in risk appetite with markets awaiting more data or events that could direct investments.

The markets are keeping a close eye on US corporate earnings results, which usually start with banks, but most focus is on the tech sector. 

Otherwise, earlier government data showed retail sales rose 0.7% in March m/m, beating estimates of 0.3%, and showcasing the strength of the economy. 

Ethereum 

Ethereum rose 0.5% as of 20:20 GMT on CoinMarketCap to $3086.  

Rebel

Rebel rose 1.5% on CoinMarketCap to $0.497. 

US stock indices rose on Monday following strong retail sales data and earnings results by Goldman Sachs. 

The markets are keeping a close eye on corporate earnings results, which usually start with banks, but most focus is on the tech sector. 

Otherwise, earlier government data showed retail sales rose 0.7% in March m/m, beating estimates of 0.3%, and showcasing the strength of the economy. 

On trading, Dow Jones rose 0.5%, or 170 points to 38,154 as of 16:04 GMT, while S&P 500 rose 0.4%, or 18 points to 5141, as NASDAQ climbed 0.2%, or 23 points to 16,198. 

International benchmark Brent fell in European trade off six-month highs, trading below $90 a barrel on active profit-taking.

The losses came as concerns about a war between Iran and Israel subsided, with both sides backing off gradually. 

Prices

Brent fell 1.1% to $89.23 a barrel, with a session-high at $90.62, after closing up 0.1% on Friday, approaching a six-month high at $92.14. 

Brent slipped 0.8% last week, the first weekly loss in five weeks on profit-taking. 

Iran-Israel Conflict 

Iran launched over 300 missiles and drones towards Israel over the weekend, the first such direct Iranian attack on Israeli territory, with most of the missiles intercepted. 

The attack was a retaliation against a perceived Israeli airstrike against the Iranian consulate in Syria. 

Despite the size of the Iranian attack, it caused very little damage in Israel, including some damages to an air base in southern Israel, while a 10-year old girl was injured. 

Iran said the military response has been done, while US President Joe Biden informed the Israeli government that the US won’t support an Israeli counterattack on Iran. 

Analysis 

RBC Capital Markets’ analysts believe the war will likely be contained if the Israeli government followed the advice of the US government and avoided an escalation. 

The oil markets will remain on guard to monitor any such developments in the highly torn and war-driven region of the Middle East.