Iran Peace Hopes Boost Gold, Pressure Oil Prices
Spot gold prices edged up 0.4% to $4,502.50 per ounce in the US session on Wednesday (May 20), after hitting their lowest level since late March. Gold futures edged down 1.1% to $4,508.00 per ounce, paring some of their early session losses. Investors weighed rising US Treasury yields and a stronger dollar against hopes of a peace deal between the US and Iran.
The 30-year US Treasury yield surged to its highest level in nearly two decades, reflecting market concerns about inflation and rising borrowing costs. This surge in yields typically puts pressure on non-yielding assets like gold. A stronger US dollar also makes gold more expensive for foreign buyers, adding to the pressure on the precious metal.
However, optimism stemmed from signs of progress in US-Iran peace negotiations. US President Donald Trump said the war with Iran could end "very quickly," after previously delaying new attacks at the request of three Gulf states. Vice President JD Vance confirmed that Tehran wants to reach a deal.
From an energy logistics perspective, two Chinese-flagged supertankers left the Strait of Hormuz, and the South Korean Very Large Crude Carrier Universal Winner also crossed, signaling the potential for a return to oil flows through this strategic waterway. The Strait of Hormuz had been virtually closed since the US-Israel war against Iran began in late February.
Oil prices responded to this sentiment, with Brent falling slightly, though remaining well above pre-war levels. The restoration of oil flows through Hormuz is expected to ease global energy price pressures and inflation concerns.
Investors are still awaiting the release of the Federal Reserve's minutes from its April meeting for further clues on the direction of interest rates, which are key to gold demand and global inflation expectations. (Arl)*
Source: Newsmaker.id
