Gold Holds Strong as US-Iran Peace Hopes Rise!
Spot gold held steady after posting its biggest daily surge since late March, supported by easing inflation concerns following a fall in oil prices amid hopes of a US-Iran deal to end the war.
Bullion traded above US$4,690 per ounce, after surging about 3% on Wednesday. At the time of writing, gold prices were hovering around US$4,695 per ounce. Weakening energy prices pushed bond yields lower, while the US dollar fell back to pre-war levels, providing additional support for gold.
On the geopolitical front, Iran is reportedly evaluating the latest US proposal to end the nearly 10-week-old conflict, while China is adding to global pressure for an immediate end to the war. President Donald Trump stated that the US would end its military campaign and ease its blockade of the Strait of Hormuz "assuming Iran agrees" to the negotiated deal.
However, market participants also warned of the risk of a rapid change in direction. TD Securities believes the peace headlines are driving the metals complex higher, but emphasizes that the situation remains fragile as neither side's demands are seen as significantly changing compared to previous proposals.
On the monetary policy front, Chicago Fed President Austan Goolsbee sounded a note of caution: inflation has not yet returned to its 2% target and has actually increased since the war began. This inflation dynamic remains important because the direction of interest rates affects yields and the dollar, two variables that typically determine the attractiveness of non-yielding gold.
At 7:41 a.m. in Singapore, spot gold was relatively flat at US$4,692.98 per ounce. Silver edged up to US$77.44 after surging 6.2% the previous day; platinum was flat, and palladium edged higher. The Bloomberg Dollar Index was barely changed after falling 0.6% in the previous session, while gold remains down about 11% since the conflict broke out in late February.
5 key points:
- Gold held above US$4,690 after rallying 3% the previous day, its biggest surge since late March.
- Hopes of a US-Iran deal weighed on oil, easing inflation concerns and lowering yields.
- The US dollar weakened to pre-war levels, providing additional support for gold.
- The risk of a reversal remains high as the peace headlines are considered fragile and the demands of both parties have not changed much.
- The Fed's comments emphasized that inflation remains a key variable, so expectations of fixed interest rates could shift gold's direction. (asd)*
Source: Newsmaker.id
