Gold Rebounds, Market Weighs Iran Peace Signals
Gold prices erased early losses and returned to trading above US$4,560 per ounce on Monday (May 18), attempting to recover from a nearly 4% decline over the past week. This movement occurred as market participants focused on potential progress in efforts to de-escalate the Iran conflict.
Although US President Donald Trump again urged Iran to act quickly, the market responded to unconfirmed reports of a possible breakthrough. The US reportedly stated it could ease sanctions on Iranian oil, while Tehran was reportedly willing to implement a long-term freeze on its nuclear program—two factors that, if realized, could lower geopolitical risk premiums.
However, gold's recovery still faces macro headwinds. Gold was previously pressured by a strengthening US dollar and rising Treasury yields after hotter-than-expected US inflation data prompted the market to dismiss the Fed's interest rate cut scenario this year.
Repricing interest rate expectations—including speculation of a possible rate hike before the end of the year—is weighing on gold's appeal, as the precious metal does not provide a yield. Thus, gold's direction is currently heavily influenced by the tug-of-war between the possibility of Iran de-escalation, which would lower the risk premium, and increasingly tight US financial conditions.
The market's next focus will be on official confirmation regarding Iran's oil sanctions and nuclear commitments, as well as the movement of the dollar and US yields, which will determine whether gold's recovery continues or stalls again. (arl)*
Source: Newsmaker.id
