Gold Holds Amid Hopes of a US-Iran Ceasefire
Gold held on to modest gains after reports emerged that the US and Iran had reached a tentative agreement to extend the ceasefire. Hopes of a de-escalation in the conflict helped calm inflation, which had previously risen amid the growing risk of energy disruptions.
According to sources briefed on the negotiations, the two sides agreed to extend the ceasefire for 60 days and open another round of negotiations on Tehran's nuclear program. However, this agreement still awaits final approval from US President Donald Trump.
Gold's recent movements have been narrow as the market has seen conflicting signals regarding the ceasefire's progress. After a sharp drop early in the war, gold prices have fallen nearly 15% since late February, although they closed up around 1% on Thursday.
In Asian markets, spot gold traded nearly flat at around US$4,496/oz, after hitting a two-month low when airstrikes sparked concerns that peace talks could be disrupted. The Bloomberg Dollar Index remained flat, having fallen 0.2% in the previous session.
Market focus has also been on the transmission path of energy to inflation and interest rates. The effective closure of the Strait of Hormuz is said to have triggered a global "inflation shock," which could lead central banks to maintain high interest rates for longer. In high interest rates, gold typically benefits less because it doesn't offer a disproportionate return.
The latest US data adds context to these pressures: consumer spending rose slightly in April, while annual inflation rose to its highest level since 2023. The US economy also grew at an annualized rate of 1.6% in the first quarter, slower than previously expected. Looking ahead, the market will monitor the progress of the deal process, developments in energy risks, and the direction of inflation and interest rates.
5 key points:
- Gold held steady after reports of a temporary US-Iran agreement to extend the ceasefire by 60 days.
- The agreement still awaits final approval by US President Donald Trump.
- Gold prices moved narrowly; they are said to have fallen nearly 15% since late February, although they rose about 1% on Thursday.
- Energy risks (the Strait of Hormuz) raise inflation concerns and potentially keep interest rates high, which tends to put pressure on gold.
- US data shows a slight increase in consumer spending, strengthening annual inflation, and first-quarter growth of 1.6% (slower than previously estimated). (asd)*
Source: Newsmaker.id
