The price of gold fell due to hopes for a truce in the Middle East. What's next?

Gold prices fell to their lowest level in two weeks on June 24. The collapse occurred after U.S. President Donald Trump announced a ceasefire between Israel and Iran. Hopes for de-escalation of the conflict reduced investor demand for protective assets and increased the attractiveness of risky ones. At the same time, shares of several gold mining-related companies may still be attractive - the persistent imbalance between supply and demand for gold contributes to further price growth.

The spot price of gold in Tuesday morning trading dropped 1.6% to $3316 per troy ounce. That's the lowest since June 11. U.S. gold futures decreased 1.7% to $3337.5. 

Amid signs of de-escalation in U.S.-Iran relations, much of the geopolitical risk is leaving the market, Ilya Spivak, head of global macroeconomics at Tastylive, explained to Reuters. Trump's announced full ceasefire between Israel and Iran could put an end to a 12-day conflict that threatens to disrupt the global oil market. 

Gold prices recovered slightly in the last hour as Israel accused Iran of launching new missiles and vowed to respond «to Iran's violation of the ceasefire with powerful strikes on regime targets in the heart of Tehran,» and froze around $3327 an ounce - 1.2% below the previous day's close.

Since the beginning of the year, gold rose in price by 28% - mainly due to the growth of geopolitical tensions. Quotes were also affected by concerns about the economic consequences of Trump's tariff policy and the increase in gold purchases by central banks. On June 24 and 25  investors will follow the speeches of Fed chief Jerome Powell in the U.S. Congress in search of signals of monetary policy easing, writes Bloomberg. Typically, lower rates support demand for gold, which does not generate interest income, the agency notes.

In the short term, gold prices are likely to continue to rise, supported by the fourth-year armed conflict between Russia and Ukraine, problems in sustaining gold mining growth, and additional demand for the precious metal from high-tech industries and medicine, accounts Zacks Investment Research. The imbalance between supply and demand is driving prices further upward, which could reach $4,000 an ounce by 2026, the analyst firm said.

On June 23, Zacks named four gold mining stocks with upside potential and a Strong Buy rating:

- American Royal Gold does not mine directly, but invests in revenue-generating rights (streaming contracts and royalty rights) to the products of precious metals mining companies, with a primary focus on gold. Expected earnings growth in 2025 is 35.9%. The Zacks' consensus earnings forecast for the current year is up 9.3% over the past two months.

- Canadian Franco-Nevada also specializes in royalty and streaming investments with a focus on gold, and also has interests in silver, platinum group metals, oil and gas, and other commodity assets. The company has a diversified portfolio with 54 assets that are already generating income and over 250 projects in the development and exploration stage. The main sources of cash flow are the Latin American mines Antamina, Antapaccay, Candelaria and Cobre Panama. The projected earnings growth is 41.7% in 2025. Zacks' consensus earnings forecast has improved 6.3% over the past 60 days.

- South Africa's Harmony Gold is the country's largest gold producer, with production of 1.47 million troy ounces (45.7 tons) for fiscal 2023. Earnings are expected to rise 14.3%, with the consensus forecast up 3.7% in two months.

- AngloGold Ashanti, another attractive South African company, is mining gold in Africa, the Americas and Australia. Its key asset is the Geita project. Expected earnings growth exceeds 100% this year, and the consensus forecast has jumped 97.2% in the past 60 days.

This article was AI-translated and verified by a human editor