Gold Extends Gains as Traders Gauge Prospects of Ceasefire Talks
Gold extended gains Wednesday after snapping a nine-day losing streak as traders weighed the likelihood of US-Iran ceasefire negotiations.
Bullion advanced as much as 2.8%, adding to a 1.6% jump in the previous session, with White House Press Secretary Karoline Leavitt on Wednesday insisting that peace talks with Iran are ongoing. Those comments ran counter to Iran’s earlier statements through state-run media publicly rejecting a ceasefire proposal from the US.
Even though the proposal was rejected, it signaled to markets that “there’s an intent from the US to move toward some sort of resolution,” said Helen Amos, commodities analyst at BMO Capital Markets. “The US is trying to open up a dialogue, and I think that’s the key thing here.”
“The market is starting to see some sort of off ramp in the coming weeks,” Amos said of the conflict, adding it’s giving “a nice bounce” for precious metals prices. “But we’re not getting convincing evidence yet that speculative money is going to come back into the space.”
Since the war began more than three weeks ago, gold has moved largely in tandem with stocks and in an inverse relationship with crude. Elevated energy prices have raised the risk of inflation, leading investors to bet that the Federal Reserve and other central banks will keep interest rates unchanged, or hike them. That’s a headwind for non-yielding bullion.
A reduction in investor positioning, reduced buying from the Middle East and expectations of rate hikes have all weighed on gold, Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note Wednesday. “With some of these factors likely to reverse in the coming months, we view the current setback in gold prices as an opportunity to add positions.”
Spot gold rose 1.3% to $4,534.52 an ounce as of 2:56 p.m. in New York. Silver gained 0.9% to $71.89, after ending the previous session 3% higher. Platinum advanced and palladium fell, while the Bloomberg Dollar Spot Index edged higher.
Source : News
