Gold Holds in the Green, Dollar Weakens Amid Negotiation Signals
Gold prices (XAU/USD) held positive during the Asian session on Tuesday (April 14), trading around US$4,775, up more than 0.65%. Although US-Iran peace talks over the weekend failed to produce a breakthrough, market participants still believe the door to diplomacy is not closed and negotiations could continue.
At the same time, uncertainty over the direction of the Fed's interest rates weighed on the US dollar, allowing gold to rebound from below US$4,650 in the previous session. US Vice President JD Vance stated that progress has been made despite the lack of a final agreement. He assessed that a framework for a comprehensive agreement is still possible if Iran is willing to take further steps.
This optimism has helped maintain risk sentiment, weakening demand for the dollar as a safe haven, and providing room for dollar-denominated commodities like gold. However, energy shocks resulting from the escalating conflict in the Middle East continue to fuel inflation concerns. Data released on Friday showed that US consumer inflation in March was at its highest level in four years. This was influenced by the war-related surge in energy prices, causing the market to reassess the possibility of a tighter monetary stance.
On the other hand, the CME FedWatch still shows a roughly 30% chance of a 25 bps interest rate cut in December, which helped support the dollar and support non-yielding gold. This combination of factors pushed XAU/USD briefly up to around US$4,777 in the last hour, but the rally appears unsustainable.
Furthermore, instability in the Strait of Hormuz remains a source of volatility, leading some market participants to hold aggressive positions in both the dollar and gold. President Donald Trump declared a US naval blockade of the strategic waterway had officially begun and threatened to destroy any approaching Iranian warships. Iran responded with threats to target all ports in the Persian Gulf and the Gulf of Oman.
This situation keeps geopolitical risks high and limits the movement of key assets, including gold, which remains sensitive to headlines and rapid changes in the dollar and interest rate expectations. (asd)
Source: Newsmaker.id
