Iran Diplomacy Lifts Gold, But Yields Restrain
Gold prices (XAU/USD) maintained modest gains on Monday (April 6th) as the US dollar weakened amid improving market sentiment, following new diplomatic developments related to efforts to end the US-Iran war. At the time of writing, gold was trading around US$4,684, rebounding from an intraday low near US$4,600.
Axios reported that the US and Iran, along with regional mediators, were discussing the option of a 45-day ceasefire that could help end the conflict. Separately, Reuters reported that Washington and Tehran had accepted the framework of a two-phase agreement to halt hostilities, which could potentially take effect as early as Monday and reopen the Strait of Hormuz. Iran, through Foreign Ministry spokesman Esmaeil Baghaei, stated that Tehran had drafted a diplomatic response to the US and would announce it in due course.
While diplomatic efforts have eased short-term tensions, markets remain wary of the risk of escalation after President Donald Trump threatened attacks on power plants and civilian infrastructure if Hormuz is not reopened and no agreement is reached by 8:00 PM Eastern Time on Tuesday. Oil prices have corrected slightly from recent peaks, but remain high compared to pre-war levels, maintaining inflation risks and concerns about global growth.
On the monetary policy front, expectations of higher global interest rates for longer—or even further increases—limit gold's upside, as higher yields dampen the appeal of non-yielding assets. Data shows the ISM Services PMI fell to 54.0 in March from 56.1, below expectations of 55. The market now awaits signals from the Fed and this week's inflation releases, including CPI and PCE, after last week's NFP came in stronger than expected.
Source: Newsmaker.id
