Gold falls as investor focus turns to G7 meeting, Fed rate decision

NEW YORK (June 16) Gold fell on Monday as investors weighed the impact of the ongoing Israel-Iran conflict, while also focusing on the Group of Seven (G7) leaders meeting and the U.S. Federal Reserve policy decision later this week.

Spot gold fell 0.4% to $3,419.89 an ounce, as of 1059 GMT, after hitting its highest level since April 22 earlier in the session.

U.S. gold futures were down 0.4% to $3,439.80.

"Geopolitical tensions are not disappearing near term, as well rates are likely to be cut further by the central bank (Fed), so that should provide a floor to gold," said Giovanni Staunovo, an analyst at UBS.

Iranian missiles struck Israel's Tel Aviv and the port city of Haifa before dawn on Monday, part of a wave of attacks by Tehran in retaliation for Israel's strikes on Friday.

The dangers of further escalation loomed over a summit of G7 leaders in Canada, as wars in Ukraine and the Middle East add to global economic uncertainty.

But there was no sign of panic among investors as currency markets stayed calm and Wall Street stock futures firmed after an early dip. [usd/]

"Investors will be watching developments in the Middle East very closely, especially the risk of other countries being dragged into the conflict," said Ole Hansen, head of commodity strategy at Saxo Bank.

Gold is considered a safe-haven asset during times of geopolitical and economic uncertainty. It also tends to thrive in a low-interest rate environment.

The Fed's interest rate decision on Wednesday followed by Fed Chair Jerome Powell's comments will be eagerly watched. The Fed has held its policy rate in the 4.25%-4.50% range since December.

Elsewhere, spot silver rose 0.2% to $36.36 per ounce, platinum rose 1.5% to $1,245.85, while palladium gained 1.3% to $1,041.49.

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