Gold extends gain as hopes for Iran truce ease inflation fears
The precious metal rises as much as 0.4% to trade around US$4,585 an ounce
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[SINGAPORE] Gold extended a gain as the prospect of a US-Iran ceasefire deal eased some inflationary concerns that have weighed on bullion.
The precious metal rose as much as 0.4 per cent to trade around US$4,585 an ounce, after ending the previous session up 0.6 per cent. President Donald Trump said on Monday (May 18) he had authorised a new wave of attacks against Iran this week, but was holding off after three Gulf allies requested more time to negotiate a nuclear deal.
Trump said the leaders of Qatar, Saudi Arabia and the United Arab Emirates had asked him to postpone because they believed they could strike a deal with Iran that would satisfy the US. Earlier the White House said a proposal delivered by Iran through Pakistani mediators on Sunday lacked meaningful improvement, Axios reported.
Treasury yields hovered near multiyear highs as still-elevated energy prices continued to fan inflation concerns. That reduces the appeal of non-yielding bullion.
Gold has traded in a narrow range since falling sharply in the early days of the war as inflationary fears were moderated by the possibility of monetary easing on growth concerns. Bullion is down more than 13 per cent since the war erupted.
The “fluidity with regards to the situation in the Middle East along with oil prices and bond yields” may still weigh on gold in the short term, said Vasu Menon, a strategist at OCBC. “We continue to see gold as a useful hedge against global uncertainties given significant political and economic changes happening globally, which look set to gather pace in the coming years,” he added.
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Spot gold was 0.4 per cent higher at US$4,584.50 an ounce as of 7.18 am in Singapore. Silver was up 1.2 per cent at US$78.68. The Bloomberg US dollar Spot Index was marginally lower after ending the previous session down 0.3 per cent. BLOOMBERG
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