Gold firms as oil prices slump after Trump holds off on Iran attack
The greenback comes under pressure, making US dollar-priced bullion more affordable
Add BT as a preferred source
[BENGALURU] Gold rose on Monday (Aug 3) as oil prices fell after US President Donald Trump held off on fresh attacks on Iran in hopes of a swift deal, slightly easing concerns over inflation and higher interest rates.
Spot gold was up 0.7 per cent at US$4,068.54 per ounce, as at 0437 GMT. US gold futures rose 0.9 per cent to US$4,066.60.
The US dollar came under pressure after authorities intervened in the foreign exchange market to support the yen, making US dollar-priced bullion more affordable for overseas buyers.
Gold has made a relatively cheery start to the week but gains remain limited given the uncertainty around the oil markets and the Middle East, so it is an upbeat but guarded start for the metal, said Tim Waterer, chief market analyst at KCM Trade.
Trump said talks with Iran will happen on Monday but declined to set a deadline for an agreement. Oil prices fell more than 5 per cent.
Gold has come under pressure since the start of the US-Iran conflict, as a war-driven rise in inflation could prompt central banks to raise interest rates.
Although bullion is traditionally viewed as a hedge against inflation, its appeal tends to diminish in a high-interest rate environment because it does not yield interest.
Market participants will also focus on a slew of US jobs reports due this week, including job openings data, the ADP employment report, weekly jobless claims and the nonfarm payrolls (NFP) report.
“Any renewed escalation in the Middle East that pushes oil higher, or a strong NFP print that reinforces September rate hike odds, could cap the upside,” Waterer said.
SEE ALSO
Three US Federal Reserve officials who dissented at the policy meeting last week in favour of a rate hike expressed concerns on Friday that without an immediate increase in short-term borrowing costs, inflation will stay stuck above the Fed’s 2 per cent target.
Analysts at Standard Chartered said in a note that they continue to expect gold to find near-term support before recovering on seasonal buying.
Spot silver gained 1.4 per cent to US$58.46, platinum climbed 0.5 per cent to US$1,650.63, and palladium firmed 1.6 per cent to US$1,293.50. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
