Gold Steady, US-Iran Talks Stall and Fed Signals Hold on Direction
Gold prices fluctuated as efforts to resume US-Iran peace talks stalled again, while energy flows through the Strait of Hormuz remained choked amid the nearly two-month-old conflict. This kept the market cautious as the risk of energy inflation remained unabated, but the safe-haven appeal for gold was also unsustainable.
Gold briefly rose 0.4% to around $4,730 per ounce, erasing initial losses after an Axios report said Iran had submitted a new proposal to the US to reopen the strait while postponing discussions on its nuclear program. Over the weekend, President Donald Trump canceled a planned trip by senior envoys to resume talks in Islamabad, while Tehran asserted it would not negotiate while under threat.
Oil also rallied on Monday as Hormuz remained nearly impassable due to a blockade from both sides, although some gains eased after the report on Iran's proposal. Rising energy prices heighten the risk of inflation and increase the likelihood of central banks holding interest rates longer or even raising them, which is a drag on gold as a non-yielding asset. In this context, gold is said to have fallen around 11% since the conflict began in late February.
From a technical perspective, the gold market is considered to have lost its direction. Nicky Shiels of MKS PAMP described gold as being in "no-man's land" technically, with thin market conviction and large allocations remaining on the sidelines. He also believes that gold has recently been behaving more like a risk asset, so interest in chasing gains at low levels is considered limited.
Market participants are also weighing the Fed's policy path after US Attorney Jeanine Pirro dropped an investigation into cost overruns at the central bank, paving the way for Trump's preferred nominee, Kevin Warsh, to advance. However, market expectations suggest Warsh is likely to take a measured approach with gradual rate cuts, rather than aggressive cuts, so the scope for gold's support from the interest rate channel still depends on a change in policy tone.
Beyond geopolitics and interest rates, institutional flows also provide additional context. Azerbaijan's State Oil Fund reportedly sold around 22 tons of gold in the first quarter after a previous rally pushed its bullion allocation to its maximum limit. In recent trading, spot gold rose 0.3% to $4,721.33 per ounce (13.07 Singapore time), while the Bloomberg Dollar Spot Index fell 0.1% after rising 0.3% last week—confirming that gold remains highly sensitive to geopolitical headlines, oil dynamics, and the direction of the dollar. (asd)*
Source: Newsmaker.id
