Gold Holds Firm After Signs of Progress on US-Iran Deal
Gold prices held firm after signs of progress in US-Iran talks to reopen access to the Strait of Hormuz and restore oil flows, which is seen as alleviating inflation concerns.
Bullion traded around US$4,560 per ounce, after rising 1.4% in the previous session. In Singapore, spot gold edged down 0.2% to US$4,561.16 at 7:56 a.m. local time.
US President Donald Trump said on Monday that talks on an interim agreement to extend the ceasefire and ease shipping restrictions in the vital waterway were “going well.” The market saw the potential restoration of energy supplies as a factor that could cushion price pressures and reduce inflationary pressures.
However, the risk of disruption remains high. Iran is said to have demanded that an end to the conflict in Lebanon be included in the deal, while local media reported an explosion in the Strait of Hormuz, a transit route approved by Tehran. Meanwhile, Israel has said it will intensify attacks on Hezbollah even as US-Iran talks continue.
Gold has weakened by about 13% since the conflict broke out in late February. As energy prices surge, market participants have increased bets on interest rate hikes as inflation is perceived as a risk, while higher interest rates typically pressure gold as this asset does not provide an interest yield.
In other markets, silver fell 0.5% to US$77.69, while platinum and palladium remained relatively stable. The Bloomberg Dollar Index also remained flat after falling 0.3% in the previous session. Some market participants believe that a more sustained recovery in gold requires a change in the dynamics of its correlation with risk assets, while near-term attention remains on developments in the Hormuz negotiations and the potential for escalation in the region. (asd)*
Source: Newsmaker.id
