Gold Rebounds as US-Iran Negotiation Signals Resurface
Gold prices edged higher after two sessions of declines, as the market assessed the possibility that reviving US-Iran peace talks could ease inflation concerns that had been weighing on bullion. Gold traded around US$4,765/oz at the start of the session, recovering most of the 0.6% decline of the previous two days.
The gains came despite the US imposing a naval blockade on the Strait of Hormuz. President Donald Trump said Iranian officials had contacted his government with the desire to "make a deal." Separately, Iranian President Masoud Pezeshkian stated that Tehran was ready to resume peace talks within the framework of international law.
As hopes for diplomacy emerged, oil prices weakened and returned below US$100/barrel, while stocks rallied. The dollar index fell about 0.2%, providing additional support for dollar-priced gold.
The energy downturn helped ease inflationary pressures that had weighed on gold for the past six weeks. The previous surge in energy costs led the market to believe that central banks were likely to hold interest rates longer, even opening the door to further tightening—a situation that is typically negative for gold, as it offers no yield.
However, the risk of energy supply shocks has not disappeared. The US blockade of Hormuz continues to increase pressure on Iran, with the US Navy moving to restrict shipping to and from Iranian ports and coastal areas. Due to continued high tensions, US financial markets continue to price the odds of a Fed rate cut this year at less than one in five.
Despite a modest recovery in recent weeks, gold is still down about 10% since the conflict broke out in late February. In the early stages of the war, liquidity pressures prompted investors to sell gold to cover losses in other assets. At 7:11 a.m. Singapore time, spot gold rose 0.5% to US$4,765.03/oz, silver rose 0.4% to US$75.88/oz, while platinum and palladium also strengthened.
5 Key Points:
- Gold edged up to around US$4,765/oz after two days of declines.
- Trump claims Iran contacted the US to "make a deal"; Iran is ready to resume peace talks.
- Oil falls below $100, stocks rise, dollar weakens, supporting gold.
- Energy declines ease inflation risks, but the Hormuz blockade keeps uncertainty high.
- US money markets still see a <20% chance of a rate cut this year; gold remains down -10% since late February. (asd)
Source: Newsmaker.id
