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Silver eases off record highs, gold falls below $4,000/oz

Gold prices dropped 2% on Friday, falling below $4,000/oz for the first session since the milestone was breached. The dollar rose and investors in gold made profits after a ceasefire agreement between Israel and Hamas.

Silver also slipped from its record high $51.22 an ounce, under pressure from the same factors that impacted gold.

Gold spot fell by nearly 2%, to $3.959.48 an ounce at 01:53 pm. ET (17:53 GMT). U.S. Gold futures for delivery in December fell 2.4%, to $3,972.6.

Silver was unchanged at $48.93 an ounce.

Dollar-priced gold is now more expensive to overseas buyers due to the 0.5% increase in the dollar index.

As the Gaza ceasefire comes into effect, speculators will be taking gold chips off of the table. This is because it lowers the temperature within a historically volatile area," said Tai Wong.

Israel and Hamas have signed a cease-fire agreement, which is the first step in President Donald Trump's initiative for ending the Gaza war.

Wong stated that "gold and silver need to consolidate, but the primary factors driving the rally remain the diversification of reserves and the large global sovereign debt growth, which keep the bullish outlook in tact."

On Wednesday, the price of gold surpassed $4,000 an ounce for a first time, hitting a new record high at $4,059.05. This non-yielding investment, which is traditionally used as a hedge in times of geopolitical or economic uncertainty, gained 52% so far this year.

The rally was fueled by geopolitical uncertainty, central bank purchases, ETF inflows on the rise, and expectations of U.S. interest rate cuts.

The minutes of the September meeting of the U.S. Central Bank, released on Tuesday, revealed that Fed officials agreed that the risks to the U.S. employment market were sufficiently high to warrant a cut in interest rates, but they remained cautious due to stubborn inflation.

In September, the Fed began a new cycle of rate cuts with a reduction of 25 basis points.

The traders see a 25-basis point reduction in October, and another one in December with 95% and 80% chances, respectively.

Silver's rise this year has been driven by the macroeconomic forces that have propelled gold's rally, and the tight supply on the spot market.

A precious metals trader stated that "Liquidity is low in the London Silver Market due to ETF purchases and metals still being shipped to the U.S."

India's Kotak Mahindra has temporarily

halted new investments

Silver ETF despite a shortage

Palladium fell 1.7% to 1,425.36 and platinum dropped 2.4% to $1622.25 (Reporting and editing by Arun K. Koyyur and Kirby Donovan in New York; Additional reporting and editing by Sarah Qureshi, Anjana Anil, and David Gregorio; and Anushree. Mukherjee and Kavya Balaraman, Bengaluru.

(source: Reuters)