Gold Steady, Talks Hopes Strengthen
Gold prices held firm in early trading on Wednesday, supported by optimism that the US and Iran are working to reach a negotiated settlement that could ease inflationary pressures stemming from energy supply shocks. Bullion hovered around US$4,840/oz after rising 2.1% in the previous session.
Sources familiar with the discussions said Washington and Tehran are preparing for a second round of peace talks in the coming days. President Donald Trump, quoted by the New York Post, said negotiations could resume "in the next couple of days," keeping the market on the de-escalation narrative even though the situation on the ground remains fragile.
Additional support came from a combination of macro markets: the dollar weakened 0.3% and US stocks surged on Tuesday, while oil remained relatively stable on Wednesday. The weaker dollar helped USD-priced gold, and falling energy prices in recent days also eased inflationary pressures that had previously been holding back gold's movement.
However, gold still faces headwinds from interest rates. Inflation concerns had led the market to expect central banks to hold interest rates longer or even tighten them, which is usually negative for gold because it does not provide a yield. Cumulatively, gold is still down around 8% since the conflict began, as liquidity pressures in the early stages of the war prompted investors to unwind positions to cover losses in other assets.
Geopolitical risks remain a determining factor. The standoff in the Strait of Hormuz persists, with the US continuing its naval blockade to suppress Iranian oil exports, while Tehran is considering a short-term halt in shipping. Even if the war ends, supply disruptions are not expected to resolve quickly, as Gulf energy infrastructure has reportedly suffered damage from missile and drone attacks. Spot gold last edged down 0.1% to US$4,838.53/oz at 7:13 a.m. Singapore time.
5 Key Points:
- Gold held near US$4,840/oz after rallying 2.1% in the previous session.
- The US-Iran are said to be preparing for a second round of talks; Trump said they could continue “in the next two days.”
- The dollar weakened 0.3%, and the US stock rally supported gold; stable oil helped ease inflationary pressures.
- Interest rate risks remain a concern: energy inflation has boosted higher-for-longer expectations, negatively impacting non-yielding gold.
- The Hormuz conflict remains fragile: the US blockade and a potential halt to Iranian shipments maintain volatility; energy recovery could be slow due to infrastructure damage. (asd)*
Source: Newsmaker.id
