Iran Deal Drags Down, Gold Weakens
Gold continued to weaken, holding onto its two-day decline, as the stalled US-Iran peace talks kept inflation concerns high. Bullion hovered around US$4,450 per troy ounce after falling a total of 2.6% in the previous two sessions.
US President Donald Trump said he was "not satisfied" with negotiations with Iran, dampening market hopes for a quick breakthrough. This statement reinforced the perception that the road to a deal remains long, although market participants continue to monitor changes in headlines.
One key point of contention remains the Strait of Hormuz. Trump did not explain concrete steps the US will take to ensure free passage of ships through the waterway. The near-closure of Hormuz since late February has led to a surge in energy prices, which has also shaken the global economy.
The rise in energy prices means inflation risks have not disappeared. Even if a peace deal is finally reached, already high energy prices have the potential to keep inflation persistent, prompting central banks to hold interest rates high for longer. A high interest rate environment is typically unfriendly to gold because it offers no yield.
This pressure was reinforced by comments from Fed officials. Federal Reserve Governor Lisa Cook said inflation is moving in the wrong direction and is prepared to support an interest rate hike if that trend persists. This message adds to the market's rationale for maintaining tight pricing policy.
In Asian trading, spot gold fell 0.1% to US$4,450.91 per ounce at 7:22 a.m. in Singapore. Silver was steady at US$74.60, while platinum and palladium traded little changed. The Bloomberg Dollar Index last rose 0.1% in the previous session, limiting the precious metal's recovery. (ayu)*
Source: Newsmaker.id
