Gold Consolidates, Market Awaits Trump's Move
Gold prices held steady on Tuesday (April 7) after two sessions of declines, as market participants weighed US President Donald Trump's latest threat to destroy Iran's infrastructure and the impact of a prolonged war on growth. Bullion briefly fell as much as 0.7% to below US$4,620 per ounce, after falling more than 2% in the previous two sessions, before paring losses.
Trump set a Tuesday deadline of 8:00 p.m. Eastern Time to reach a deal with Tehran or launch attacks on power plants and bridges, raising the stakes in a conflict that has tightened global energy supplies and raised inflation concerns. The war, which is entering its sixth week, raises the possibility of central banks delaying interest rate cuts or even raising them, while the bond market is pricing in the Fed potentially holding rates until the end of the year. Higher borrowing costs typically weigh on gold because it offers no yield.
Since the conflict began in late February, gold has fallen about 12% as its safe-haven appeal has been eroded by investors' need to liquidate positions to cover losses in other assets. Gold has also tended to move inversely with oil, which rose for a third day. However, energy supply shocks and cost pressures are seen as depressing growth, factors that could further support gold. Recent data shows the US services economy continued to expand but slowed in March, with the largest decline in the employment component since 2023 and accelerating input prices.
On the positioning side, there are indications of buying on dips: gold ETF holdings rose last week for the first time since the war began. Trump has insisted that reopening the Strait of Hormuz must be part of any deal, while Iran has so far rejected the US proposal and warned of escalating attacks if it receives additional attacks.
At 9:15 a.m. London time, spot gold edged up to US$4,661.25/oz. Silver fell 0.1% to US$72.70, platinum weakened, and palladium fluctuated, while the Bloomberg Dollar Index remained relatively flat.
Source: Newsmaker.id
