Gold extends gains as reports of Iran war talks offer respite

[SINGAPORE] Gold extended gains after reports that the US is seeking a diplomatic route to ending the war in the Middle East snapped the precious metal’s nine-day losing streak.

Bullion advanced as much as 1.8 per cent to return above US$4,500 an ounce, adding to a 1.6 per cent jump in the previous session. US President Donald Trump said that Iran had offered a “present” as a show of good faith in negotiations, noting it was related to energy flows via the Strait of Hormuz. Washington and regional mediators are discussing the possibility of holding high-level peace talks as soon as Thursday (Mar 26), but await a response from Teheran, Axios reported.

Oil fell and equities climbed, while a gauge of the US dollar dropped 0.2 per cent. Since the war began more than three weeks ago, gold has moved largely in tandem with stocks and in an inverse relationship with crude. Elevated energy prices resulting from the conflict have raised the risk of inflation, leading investors to bet on higher interest rates. That’s a headwind for non-yielding precious metals.

In recent weeks, declines in global stocks and bonds have also forced investors to ditch their positions in gold to raise cash, further amplifying losses in bullion.

The market remained on edge, with Iran keeping a tight grip on Hormuz and Israel continuing strikes on the Islamic Republic. The Trump administration ordered the Army’s 82nd Airborne Division to deploy about 2,000 soldiers to the Middle East, adding to around 5,000 troops that should start arriving in the region in the coming days.

There were also reports that central banks are selling gold to defend currencies. Turkey’s central bank is preparing an expanded toolkit to defend the lira from war-related volatility, which includes potentially tapping its vast bullion reserves, and the bank has held discussions about possible gold-for-foreign-currency swap transactions in the London market, according to sources familiar with the matter.

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Gold extends decline for 10th day as Iran war concerns persist

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The massive accumulation of bullion by central banks since 2022 was a key driver of gold’s multiyear bull run, although the pace of buying had already slowed going into this year.

Spot gold rose 1.6 per cent to US$4,546.55 at 8.03 am Singapore time. Silver gained 2.4 per cent to US$72.89 an ounce, after ending the previous session 3 per cent higher. Platinum and palladium advanced, while the Bloomberg Dollar Spot Index fell 0.2 per cent. BLOOMBERG