(Reuters) - Gold shed over 1% after vaulting above the $1,600 level for the first time in nearly seven years on Wednesday after remarks by U.S. President Donald Trump eased fears of a larger conflict with Iran.
Spot gold XAU= dropped nearly 1% to $1,559.22 per ounce as of 1:32 p.m. ET (1834 GMT). Prices had earlier soared to $1,610.90 in the session, their highest level since March 2013. U.S. gold futures GCcv1 settled 0.9% lower at $1,560.20.
Trump said Iranian missile strikes on bases in Iraq had not harmed any U.S. troops, and that Tehran appeared to be standing down.
Earlier in the session gold jumped as much as 2.4% after Iran retaliated to a U.S. drone strike that killed an Iranian military commander last week. The U.S. attack led to fears of a new war in the Middle East.
“Expectations are that we’re not going to see a war, so you might see some softness. The rest of the catalysts remain in place for gold,” said Edward Moya, a senior market analyst at OANDA.
“We could see some weakness down to $1,550, but in the end we are likely to see prices continue to march higher to $1,640 in the short term.”
However, with no casualties after the strike and tweets from Iranian officials stating that Tehran did not want a war and that its strikes “concluded” its response to Friday’s killing, concerns of conflict in the region ebbed, dampening demand for safe-haven gold.
Graphic: Gold eases off $1,600/oz peak, here
Gold is a preferred asset during times of political and economic uncertainty.
“Although the hostilities seem to be over - at least for now - the situation could easily re-escalate in fairly short order,” said Edward Meir, analyst at ED&F Man Capital Markets.
The geopolitical and economic drivers which impacted gold prices in 2019 - including U.S.-China trade tensions, Brexit and the U.S. Federal Reserve’s monetary policy - would continue into 2020, the World Gold Council said in a note.
Investors also kept a close eye on economic data from the United States. Data showed U.S. private payrolls surged in December, weighing on the metal.
Meanwhile, palladium XPD= extended its rally, undaunted by most market events driving other precious metals. Prices were up 2.6% at $2,104.95, close to the all-time high of $2,108.81 notched earlier in the session.
Platinum XPT= eased 1.4% to $957.02 an ounce, while silver XAG= shed 1.3% to $18.15. Silver prices had earlier notched a four-month high of $18.85.
Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by Andrea Ricci and Lisa Shumaker