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Investing.com– Gold prices fell sharply in Asian trade on Monday, pressured by a drop in safe haven demand after reports of ceasefire talks between Israel and Hezbollah pointed to a potential deescalation in the Middle East. 

Still, the yellow metal was sitting on strong gains from last week, as heightened tensions between Russia and Ukraine pushed up safe haven demand. 

Spot gold fell 1.6% to $2,670.82 an ounce, while gold futures expiring in December fell 1.5% to $2,697.10 an ounce by 23:33 ET (04:33 GMT). 

Broader metal prices were buoyed by a sharp drop in the dollar, which retreated in tandem with Treasury yields after U.S. President Donald Trump nominated prominent investor Scott Bessent, viewed as a moderate pick, as his Treasury Secretary. 

Bessent’s nomination also cleared a major point of uncertainty for markets.

Israel considering Hezbollah ceasefire, reports say 

Israel is close to clinching a ceasefire deal with Lebanese militant group Hezbollah, reports from Axios and CNN said over the weekend, with the U.S. brokering the deal. 

The Times of Israel reported that Prime Minister Benjamin Netanyahu was working on how to present the ceasefire deal to the public, after agreeing in principle to the Lebanon deal. The deal could see a 60-day ceasefire with Hezbollah and a de escalation of military action on both sides.

Reports of the deal pointed to a potential de-escalation in the long-running Middle Eastern conflict, which in turn weighed on safe haven demand for gold. Still, they were undermined by both Israel and Hezbollah launching more strikes against each other over the weekend.

Gold was sitting on strong gains through the past week after a ramp-up in tensions between Russia and Ukraine. These tensions are likely to continue this week, with few avenues for de escalation in the long-running conflict.

Other precious metal prices also sank on Monday, with platinum and silver futures losing over 1% each. 

Dollar losses offer metal markets some relief 

The dollar index slid from a 13-month high on Monday after Bessent’s nomination, with analysts viewing him as a voice of moderation and reason in the Trump administration.

Treasury yields fell sharply on this notion, which in turn weighed on the dollar.

Weakness in the dollar helped contain some losses in metal markets, although this relief was limited. 

Industrial metals, however, advanced. Benchmark copper futures on the London Metal Exchange rose 0.9% to $9,062.50 a ton, while December copper futures rose 0.6% to $4.1630 a pound.

Copper markets were awaiting a barrage of key economic readings from top importer China, due later this week.