Gold Steady Near Record as Markets Weigh Fragile Iran Ceasefire
Gold prices held steady after two consecutive days of gains, as market participants assessed the possibility of a diplomatic path in the Iran war, although sporadic clashes still risked disrupting the fragile ceasefire.
Bullion held around US$4,715 per ounce, after rising 1.5% in the previous two sessions. The White House stated that the US would hold direct talks with Iran, while Tehran viewed Israel's attack on Lebanon as a violation of the day-old ceasefire and continued its attacks on Gulf states.
Meanwhile, the Strait of Hormuz remained largely blocked despite Iran's signal of assurances of smooth shipping. Energy markets were also volatile, with oil bouncing after posting its biggest daily drop since April 2020, while stocks rose and the US dollar weakened, which tends to support gold because it is priced in dollars.
However, gold's appeal as a hedge is not considered entirely dominant. Some investors are said to be using gold as a source of liquidity to cover losses in other assets, so its movements in recent weeks have tended to align with the stock market since the war began.
From a monetary policy perspective, the conflict, which is entering its second month, has triggered a surge in energy prices and increased inflation risks, which could lead central banks to delay interest rate cuts or even consider raising them. This situation typically presents a drag on non-yielding gold, although the risk of a growth slowdown due to the war could also open up room for rate cuts if the labor market weakens.
In recent trading, spot gold edged down 0.1% to US$4,715.10 per ounce. Silver weakened 0.4% to US$73.82, while platinum and palladium also fell. The Bloomberg Dollar Index remained relatively flat after falling 0.8% in the previous session.
5 Key Points:
- Gold held steady around US$4,715/ounce after rising 1.5% in two days.
The US plans to hold direct talks with Iran, but the ceasefire remains fragile.
- The Strait of Hormuz remains largely blocked; tensions keep geopolitical risks high.
- The weakening dollar and strengthening stocks also influence gold prices, with its safe haven function not being fully dominant.
- Inflationary risks from the energy boom may hold back interest rate cuts, but an economic slowdown could push the interest rate scenario lower. (asd)
Source: Newsmaker.id
