Why are gold prices suddenly dipping? All you need to know

Gold losing sheen: Well, gold prices took a bit of a dive on Tuesday, hitting ir lowest levels in over two weeks. Seems like worries about Middle East crisis calming down and some investors deciding to cash in on ir gains were main reasons behind drop.

Spot gold was down nearly 1 per cent at $2,304.99 per ounce, as of 0336 GMT US gold futures fell 1.2 per cent to $2,318.80.

previous session was a rough ride for gold, plunging over 2 per cent in what was its biggest one-day tumble in over a year. It seems like once Iran said it wasn't planning to retaliate after an Israeli drone attack, folks felt a bit less worried about a bigger conflict.

Gold prices have taken a hit recently, with analysts pointing to reduced expectations of imminent rate cuts by US Federal Reserve as a primary factor. According to reports, possibility of a rate cut might not materialise until September. This has led to a decrease in demand for gold as investors view it less favourably as a hedge against inflation.

Moreover, strengning of US dollar and rise in bond yields have contributed to downward pressure on gold prices, exacerbating trend.

Economic data focus

Also, looking forward, all eyes are on economic data coming out of US later this week, especially GDP figures on Thursday and Personal Consumption Expenditures (PCE) print on Friday. If those numbers come in better than expected, it might delay any hopes of rate cuts by Federal Reserve, which could mean more trouble for gold prices in short term.

Gold has experienced a surge in value recently, jumping over 50 per cent since February 2020, just before COVID-19 pandemic swept across globe. In last two months, price has surged nearly 20 per cent in last two months alone.
Unlike many or commodities, gold's value is predominantly driven by investor perception rar than specific utility. Unlike stocks and bonds, it doesn't provide dividends or coupon payments. Yet, despite lacking se features, gold remains highly coveted.

Central banks have been primary drivers of market. Institutional and government buyers, particularly in China, have displayed a significant appetite for gold, furr propelling its prices.

Now, this week's US inflation and GDP data will provide more clarity on US Fed rate cut and that in turn will give more clarity as to how gold prices will behave going forward.