Gold Steady, Markets Eye US-Iran Talks and Fed Direction
Gold prices held steady as market participants weighed the chances of a deal to end the war in Iran, which has disrupted global energy supplies and heightened inflation risks. Bullion held around $4,830 per ounce in early trading, after falling 0.2% in the previous session.
Market focus was on plans for the next round of US-Iran peace talks in Pakistan. US Vice President JD Vance is reportedly heading to Pakistan for further negotiations, while Iran is also said to be sending a delegation after previously expressing hesitation about participating, according to sources familiar with the plans.
The ceasefire deadline is also a key variable. President Donald Trump said the two-week ceasefire would expire "Wednesday night Washington time," leaving the diplomatic window narrow and vulnerable to disruption by developments on the ground.
Meanwhile, the war, now in its eighth week, continues to trigger energy supply shocks, adding to inflationary pressures. This situation makes central banks more likely to hold interest rates longer or even consider raising them, which is a drag on gold because it offers no yield, although Marc Loeffert of Heraeus Precious Metals believes that gold's weakness during the war has not changed its fundamental appeal as a long-term hedge against purchasing power.
Market participants are also awaiting Trump's preferred Fed chairman, Kevin Warsh, to testify before the Senate Banking Committee. Signals pointing to policy easing this year could potentially support gold, while a more cautious stance on inflation and a refusal to cut interest rates would tend to pressure the precious metal. Warsh is also expected to reiterate his commitment to maintaining central bank independence.
In recent trading, spot gold rose 0.2% to $4,831.77 per ounce (7:00 a.m. Singapore), with the Bloomberg Dollar Index flat after falling 0.1% in the previous session. Meanwhile, oil prices weakened on Tuesday after U.S. stocks fell from a record high on Monday, leaving the direction of both gold and oil influenced by a combination of developments in the talks, the ceasefire deadline, and expectations for interest rates and inflation.
5 key points:
- Gold held steady around $4,830/oz, after falling 0.2% in the previous session.
- The market awaits a new round of US-Iran talks in Pakistan; JD Vance is heading to Pakistan, and Iran is said to be sending a delegation.
- Trump confirmed the two-week ceasefire ended Wednesday night Washington time, increasing market sensitivity to headlines.
- Energy supply shocks heighten inflation risks; central banks are likely to hold or raise interest rates, creating a headwind for gold.
- The market is also monitoring Kevin Warsh's testimony; dovish signals support gold, while hawkish signals on inflation could potentially weigh on gold; oil is said to weaken on Tuesday. (asd)*
Source: Newsmaker.id
