Gold Under Pressure in Asia, Focus Shifts to These Two Things!
Gold prices weakened as market participants weighed the chances of reaching a negotiated agreement to end the Iran war, which has disrupted global energy supplies and raised inflation risks. Bullion fell 0.6% to trade below $4,800 an ounce, after weakening 0.2% in the previous session.
Market focus was on plans for the next round of US-Iran peace talks in Pakistan. US Vice President JD Vance is said to be heading to Pakistan for further negotiations, while Iran is also reportedly sending a delegation after previously expressing hesitation about participating, according to sources familiar with the plans.
The ceasefire deadline was a major factor in volatility. President Donald Trump said the two-week ceasefire would expire "Wednesday night Washington time" and was unlikely to be extended, keeping the market on edge as talks actually materialize before the deadline.
According to Manav Modi, an analyst at Motilal Oswal Financial Services, the market remained tense as conflicting signals from both sides added to volatility, while geopolitical uncertainty and the direction of monetary policy kept gold under pressure. At the same time, oil weakened on Tuesday and global equities rebounded after a brief lull, dampening some of the demand for safe haven assets.
Fundamentally, the war, which is entering its eighth week, is said to have triggered energy supply shocks and heightened inflationary pressures, making it more likely that central banks will hold interest rates or even raise them, creating a drag on non-yielding gold. Gold is said to have fallen about 9% since the conflict began in late February, although Heraeus Precious Metals trader Marc Loeffert believes this decline does not change gold's fundamental role as a long-term purchasing power preserver.
The market is also awaiting Trump's Fed chairman nominee, Kevin Warsh, to testify before the Senate Banking Committee on Tuesday. Signals of policy easing this year could support gold, while a more cautious stance on inflation and hesitation about cutting interest rates could weigh on the metal. Warsh is also expected to reiterate his commitment to maintaining central bank independence. In recent trading, spot gold fell 0.5% to $4,793.80 per ounce (12:22 Singapore time), with the Bloomberg Dollar Spot Index slightly higher.
5 key points (detailed & simple):
- Gold fell 0.6% and traded below $4,800/oz; spot gold $4,793.80 (-0.5%).
- Markets weigh the possibility of US-Iran talks in Pakistan; JD Vance is heading to Pakistan, and Iran is said to be sending a delegation.
- Trump said the ceasefire ended Wednesday night Washington time and is unlikely to be extended, maintaining volatility.
- Inflationary pressures from energy supply shocks are driving expectations of high interest rates, creating a headwind for gold.
- Markets await Kevin Warsh's testimony; a dovish signal could support gold, while a hawkish one on inflation could weigh. (asd)
Source: Newsmaker.id
