Gold Continues Gains Since Late March
Gold extended gains after posting its biggest daily surge since late March, buoyed by sentiment that a potential US-Iran deal could ease energy price pressures and inflation concerns. As of Thursday (May 7), gold was trading at $4,731.12, up 0.86%.
Bullion was trading above $4,700 per ounce after rising 3% on Wednesday. Weakening energy prices are said to be pressuring bond yields, while the US dollar has fallen to pre-war levels, providing support for dollar-denominated gold, which does not yield interest.
Market optimism strengthened after news emerged that Iran was evaluating a new US proposal to end the nearly 10-week war, according to sources familiar with the discussions. China is also said to be increasing global pressure for an end to hostilities.
President Donald Trump has repeatedly indicated that a deal is close, although it has not yet materialized. On Wednesday, he stated on social media that the US would end its military campaign and lift its blockade of the Strait of Hormuz, "assuming Iran agrees to what has been agreed."
TD Securities believes headlines about the potential for peace have boosted precious and base metals, but cautions that the narrative remains fragile, as the U.S. and Iran's demands are seen as unchanged from previous proposals.
On the policy front, Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem emphasized caution, highlighting that inflation remains above the 2% target. Spot gold rose 0.2% to $4,701.96 at 1:59 p.m. in Singapore; silver rose 0.6% to $77.83 after surging 6.2% on Wednesday, while the Bloomberg Dollar Index remained flat after falling 0.6% in the previous session.
Here are 5 key points:
- Gold held above $4,700/oz after rallying 3% on Wednesday.
- Hopes of a U.S.-Iran deal weighed on oil and eased inflation concerns, supporting gold.
- The dollar weakened and yields were said to have fallen, providing a tailwind for non-yielding gold.
- Trump left open the possibility of ending operations and lifting the blockade of the Strait of Hormuz, provided Iran agrees to a deal.
- Several Fed officials emphasized that inflation remains above the 2% target, maintaining a cautious market stance. (asd)*
Source: Newsmaker.id
