Gold Holds Ahead of Iran Negotiations
Gold prices held steady after posting three consecutive days of gains, as market participants weighed the prospects for a deal on the Iran war. US President Donald Trump said he was "optimistic" about a deal with Iran, although the continued closure of the Strait of Hormuz remains a major source of uncertainty.
Gold bullion hovered around US$4,765 per ounce in early trading, having risen 2.5% in the previous three sessions. Attention now turns to Saturday's negotiations in Islamabad, where a US delegation led by Vice President JD Vance is scheduled to meet Iranian officials to discuss key issues, including the dynamics of energy flows in the region.
Tensions remain high as Trump also threatened Tehran over alleged fees imposed on tankers passing through Hormuz. At the same time, Israeli attacks in Lebanon have added risks to the stability of the fragile ceasefire, keeping the market cautious about adding positions.
In financial markets, oil rose for a second day but was still headed for its biggest weekly decline since June, while stocks rallied on Thursday. The Bloomberg Dollar Index fell 0.2% in the previous session, a condition that typically supports gold because the precious metal is priced in US dollars.
However, since the war began, gold has fallen nearly 10% as some investors dumped hedge assets to cover losses in other instruments. Furthermore, the six-week conflict has increased inflation risks, increasing the likelihood that central banks will delay interest rate cuts or even consider raising them, which is a drag on gold because it offers no yield.
On the US data front, consumer spending rose only slightly in February amid persistently high inflation, according to a Bureau of Economic Analysis report on Thursday. The market is awaiting the release of the Consumer Price Index (CPI) for March from the Bureau of Labor Statistics on Friday for clues on inflation and interest rate policy expectations.
5 key points:
- Gold is stable around US$4,765/ounce after rising 2.5% in the last three sessions.
- Markets are weighing the chances of an Iran deal, with focus on Saturday's talks in Islamabad led by the US delegation (JD Vance).
- Uncertainty remains high due to the remaining closure of the Strait of Hormuz and Trump's threats regarding alleged tanker passage fees.
- The Bloomberg Dollar Spot Index's (-0.2%) decline supported gold, amid rising stocks and a two-day rise in oil.
- The risk of an inflation war increases the likelihood of interest rates remaining high, while the market awaits the March US CPI for further policy direction. (asd)
Source: Newsmaker.id
