Deal Becomes Catalyst, Gold Holds Higher
Gold prices rose on Thursday (April 16), as investors weighed growing optimism about the chances of a US-Iran deal to end the war that has driven up energy prices and fueled inflation concerns. Spot gold rose 0.4% to US$4,809.94/oz, while US gold futures for June delivery rose 0.2% to US$4,832.10/oz.
The US dollar held near a six-week low, making greenback-denominated commodities cheaper for buyers outside the US. The 10-year US Treasury yield also weakened slightly, boosting the appeal of the non-yielding precious metal.
President Donald Trump's administration expressed optimism Wednesday that a deal to end the war with Iran could be reached, while warning that economic pressure on Tehran could be increased if it persists. Trump said the conflict that began in late February was "almost over," although the shipping blockade he announced was in effect and shipping traffic through the Strait of Hormuz remained far below normal.
Overall, gold is still down more than 8% since the Iran war broke out in late February, when the energy boom fueled inflation concerns and reinforced the narrative of higher interest rates for longer—conditions that typically weigh on gold, even though it is often viewed as an inflation hedge. In the interest rate market, market participants now see a roughly 29% chance of a 25 bps rate cut this year, down sharply from pre-war expectations that had pointed to two cuts.
The market will be monitoring developments in US-Iran negotiations, the status of Hormuz traffic, the direction of energy prices, as well as movements in the dollar and Treasury yields, which shape expectations for the Fed's policy path. (Arl)*
Source: Newsmaker.id
