Gold Weakens as Market Weighs Iran Peace Proposal and Interest Rate Direction
Gold prices edged lower as market participants weighed the latest efforts by the US and Iran to reach a negotiated solution to the two-month war that has strained energy supplies and raised inflation risks. Bullion traded around $4,665 per ounce, after falling 0.6% on Monday (April 28).
The White House said US President Donald Trump held a meeting with national security officials to discuss Iran's latest peace proposal. However, according to spokeswoman Karoline Leavitt, the US remains committed to its "red lines" in any deal to end the conflict.
The statement followed reports that Tehran offered a temporary deal to reopen the Strait of Hormuz in exchange for an end to the US blockade of shipping in and out of Iranian ports. The proposal said the more complex negotiating issue of Iran's nuclear program would be postponed for later discussions.
Marc Loeffert of Heraeus Precious Metals believes that extending the ceasefire without opening Hormuz further increases market uncertainty. He added that in the long term, the combination of economic slowdown and rising prices could maintain gold's appeal as a hedge, although short-term volatility is expected to persist.
This week, the market is also awaiting interest rate decisions in the US, Europe, the UK, and Canada. In Japan, the Bank of Japan maintained its benchmark interest rate at 0.75% in a split vote, which is seen as increasing the chances of a June hike. At the same time, energy supply shocks during the eight-week conflict have heightened inflation risks, making the central bank more likely to hold interest rates longer or even raise them—a situation that has been a drag on non-yielding gold; gold is said to have fallen nearly 12% since the conflict began in late February.
In recent trading, spot gold fell 0.3% to $4,667.04 per ounce (12:27 Singapore time). Silver fell 1.3% to $74.55, while platinum and palladium weakened slightly. The Bloomberg Dollar Spot Index was flat after falling 0.1% on Monday. (asd)*
Source: Newsmaker.id
