A worker polishes gold bullion bars in Australia. — AFP
Gold prices dropped on Monday as traders locked in profits following a rally to a near two-month peak, sparked by intensified clashes between Israel and Iran over the weekend that heightened fears of a broader regional conflict.
Spot gold was down 0.5% at $3,414.32 an ounce, as of 0634 GMT, after hitting its highest level since April 22 earlier in the session.
U.S. gold futures were also down 0.5% at $3,434.80.
"It's the joint political risk premium that's rising due to the Iran-Israel conflict at this point that has boosted safe-haven demand for gold," said Kelvin Wong, a senior market analyst, Asia Pacific at OANDA.
"We have a clear break above $3,400 right now and the short term uptrend is intact. We are seeing resistance level at $3,500 and with the possibility of breaking new high above the $3,500 level."
Israel and Iran launched fresh attacks on Sunday, killing and wounding civilians and raising concerns of a broader regional conflict, with both militaries urging civilians on the opposing side to take precautions against further strikes.
U.S. President Donald Trump said he hopes Israel and Iran can broker a deal but said sometimes countries have to fight it out first.
Gold is considered a safe-haven asset during times of geopolitical and economic uncertainty.
Investors this week will look forward to a host of central bank monetary policy decisions, with the spotlight on the U.S. Federal Reserve on Wednesday.
The U.S. central bank is widely anticipated to keep interest rates steady, with markets awaiting signals on potential rate cuts in the months ahead.
Futures markets suggest expectations for two rate cuts by year-end, possibly starting in September, bolstered by tame inflation data last week.
Elsewhere, spot silver gained 0.2% to $36.36 per ounce, platinum rose 1.5% to $1,245.67, while palladium climbed 1.5% to $1,043.53. - Reuters
