Gold Held Back, US-Iran Signals Unsettling Markets
Gold prices held steady on Tuesday (June 2nd) after a sharp drop the previous day, as the market digested conflicting messages from the US and Iran regarding a diplomatic path to ending the war. Bullion hovered around US$4,485 per troy ounce after falling 1.2% on Monday, indicating market participants were hesitant to take aggressive positions amid the uncertainty.
The confusion was fueled by recent developments surrounding the Strait of Hormuz. US President Donald Trump said talks with Iran were proceeding "rapidly" and claimed Israel and Hezbollah had agreed to halt mutual attacks. Meanwhile, Iran threatened to halt diplomatic exchanges and even completely close the strategic shipping lane. These discordant narratives made it difficult for the market to assess whether the de-escalation was genuine or merely temporary.
The impact was evident in other assets. Oil posted its biggest daily gain in about a month on Monday as the market reintroduced a premium on supply risk. Bond yields and the US dollar also rose, a combination that is usually unfavorable for gold, as the precious metal does not yield a yield and is priced in dollars.
Additional pressure comes from US economic data. US manufacturing activity in May reportedly expanded at the fastest pace in four years. With growth remaining strong, the market believes the Fed has less reason to immediately ease policy to stimulate consumption, reinforcing the "higher for longer" interest rate narrative.
At this point, gold is in a tug-of-war: geopolitical risks could support hedging demand, but strengthening yields and the dollar are limiting upside. Therefore, prices are likely to stabilize in the lower area after Monday's decline, awaiting confirmation of the next headlines.
In Asian trading at 7:07 a.m. in Singapore, spot gold was virtually unchanged at US$4,486.28 per ounce. Silver rose 0.2% to US$74.97, while platinum and palladium edged higher. The Bloomberg Dollar Spot Index was flat after closing up 0.3% in the previous session.
5 key points:
- Gold held around US$4,485 after falling 1.2% on Monday.
- Conflicting US-Iran messages: Trump claims swift negotiations, Iran threatens to shut down Hormuz.
- Oil surge, rising yields, and a stronger dollar limit gold's recovery.
- Strong US manufacturing data reduces the urgency of Fed easing.
- Markets remain headline-driven: gold's direction depends on Hormuz, the dollar, and interest rate expectations. (asd)*
Source: Newsmaker.id
