Gold Recovers, Iran Deal Hopes Lift Sentiment
Gold prices pared initial losses and moved sideways above $4,450 per troy ounce on Thursday (May 28), as the market weighed hopes for progress in Middle East diplomacy against lingering inflation concerns. This relatively flat movement occurred because safe-haven flows from geopolitics were not strong enough to offset the burden of interest rates and the dollar.
According to Axios, US and Iranian negotiators reportedly reached a 60-day memorandum of understanding (MoU) to extend the ceasefire and reopen talks on Iran's nuclear program, although President Donald Trump's final approval is still pending. This news improved risk appetite, but uncertainty about implementation limited gold's reaction.
On the ground, tensions remained high. The US-Iran exchange of attacks continued, while Israel reportedly resumed attacks on Hezbollah targets in Lebanon despite the fragile ceasefire. This combination of headlines kept the market headline-driven, with gold moving cautiously near a two-month low.
From a fundamental perspective, high energy prices have heightened inflation concerns and dampened expectations of imminent interest rate cuts, limiting the recovery potential for gold as a non-yielding asset. Several Fed officials have maintained a cautious tone: Lisa Cook supports holding rates steady for now but allows for a hike if inflation picks up again, while John Williams warned that inflation could move closer to 4% (headline) and 3% (core) in the near term.
The market's next focus will be whether the MoU is actually agreed upon and followed by implementation steps that lower the energy risk premium. Inflation data and Fed commentary will determine whether the "higher for longer" narrative remains a major drag on gold. (Arl)*
Source: Newsmaker.id
