Gold Falls as Trump Rejection of Iran Offer Fans Inflation Fears
Gold fell as President Donald Trump’s rejection of Iran’s latest peace offer to end the war in the Middle East fanned inflation fears.
Bullion dropped as much as 1.4% to below $4,650 an ounce. Washington and Tehran remain far apart on a peace framework, with Trump labeling Iran’s latest response to his proposal to end the conflict as “totally unacceptable.” The inflationary impact of the war has dimmed prospects of central bank interest-rate cuts that are typically positive for non-yielding bullion.
Weekend attacks in the Middle East also underscored the fragility of the ceasefire that began on April 8. A drone strike on Sunday briefly set a cargo vessel ablaze off Qatar in the Persian Gulf. The United Arab Emirates and Kuwait said they had intercepted hostile drones.
Trump’s rejection of the latest proposal shows that his priority appears to be curbing Iran’s nuclear ambition, which means “either further escalation in the Middle East or stalling talks at best,” Priyanka Sachdeva, an analyst at Phillip Nova Pte Ltd., said in a note.
“Gold prices continue to reflect a broad sideways consolidation, as markets remain trapped between geopolitical anxiety and rising inflation worries,” she added. The combination is likely to keep gold “directionless despite extreme volatility across global markets.”
Looking ahead, consumer price data due Tuesday is likely to affirm inflation remains a threat in the US, following March’s biggest monthly advance since 2022.
Current Federal Reserve Chair Jerome Powell’s tenure is set to end this week. His term has been marked by his resistance against political influence. Perceived threats to the Fed’s independence had been central to gold’s rally early this year.
Data released Friday showed that US employers added to payrolls for a second month in April, marking the first back-to-back advance in nearly a year, and the unemployment rate held steady at 4.3%. This offers the Fed space to keep rates unchanged for the foreseeable future as they focus on fresh inflationary risks from the war with Iran.
Indian Gold Purchases
Indian Prime Minister Narendra Modi on Sunday called on citizens to avoid buying gold for at least a year, in order to preserve foreign-exchange reserves for costly fuel shipments. India is the world’s second-biggest importer of bullion, and gold constitutes the largest share in its import bill after oil.
Spot gold fell 1.1% to $4,665.02 an ounce as of 10:19 a.m. in London. Silver was steady at $80.27 an ounce. Platinum and palladium declined. The Bloomberg Dollar Spot Index was up 0.1%.
Source: Newsmaker.id
