Gold Edges Higher as US-Iran Diplomacy Eases Inflation Fears
Gold prices edged higher after renewed push for a solution to Iran's war on communications eased inflation concerns heading toward the ongoing Strait of Hormuz. Bullion rose back above US$4,810 an ounce after falling 1.1% in the previous session.
Sources familiar with the discussions said the US and Iran were considering extending the ceasefire by two weeks to give more time for negotiations to end the conflict that has disrupted global markets. However, shipping movement in Hormuz remains hampered by the US blockade of Iranian vessels, while Tehran maintains the closure of the vital waterway to most other traffic.
The Associated Press reported that the two sides have an "agreement in principle" to resume diplomacy after an initial round of talks in Pakistan ended without a definitive outcome. US President Donald Trump said Tuesday that the nearly seven-week war is "almost over." Market-wise, oil held steady on Thursday, US stocks closed at a record in the previous session, and the dollar index edged lower.
The drop in oil prices in recent days has helped ease inflation concerns that had previously fueled expectations of a longer-term interest rate hold. However, the swaps market still expects the Federal Reserve to hold rates this year, in line with comments from St. Louis Fed President Alberto Musalem and Cleveland Fed President Beth Hammack, who stated that interest rates could potentially "stay" for quite some time. High interest rates remain a drag on gold, which does not offer an imbalanced yield.
Standard Chartered believes gold is not yet completely safe as the ceasefire remains fragile and market focus is shifting to real yields, while the need for liquidity could again put downward pressure on prices. On the fund flow side, gold has fallen about 9% since the war began due to liquidity pressures early in the conflict, but signs of buying interest are starting to return: gold-backed ETFs have added about 25 tons so far this month after cutting about 94 tons in March. As of 7:15 a.m. Singapore time, spot gold rose 0.5% to US$4,812.95 per ounce, while silver strengthened 0.6% to US$79.39. (asd)*
Source: Newsmaker.id
