Gold gains as prospects of Iran deal temper inflation concerns

[MELBOURNE] Gold rose as signs that the US and Iran were closing in on a deal that would reopen the Strait of Hormuz tempered inflation concerns.

Bullion was trading around US$4,564 an ounce, after falling 0.7 per cent on Friday (May 22). Negotiations on the precise language of the deal were ongoing and it may take several days for both sides to get final approval, US officials told reporters on Sunday. US President Donald Trump said on social media that he will not “rush” into an agreement.

Earlier, US Secretary of State Marco Rubio had said that there may be “some good news” regarding Hormuz in the coming hours, as Iran and Washington pressed ahead with peace negotiations.

Gold had declined on Friday after US Federal Reserve governor Christopher Waller warned the energy shock from the Iran war could fuel inflation, ramping up bets on monetary tightening.

Bullion has traded within a fairly narrow range since falling sharply in the early days of the Iran war, as investors weigh higher rates against the prospect of a high-inflation, low-growth scenario. Bullion is down about 14 per cent since the conflict began in late February.

Spot gold was up 1.2 per cent at US$4,564.09 an ounce at 6.50 am in Singapore. Silver was 3 per cent higher at US$77.80. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed. BLOOMBERG