Gold holds fall as traders digest confusion over US-Iran talks

[SINGAPORE] Gold held a decline as conflicting messages from the US and Iran on a diplomatic resolution to the war kept concerns over prolonged trade and geopolitical disruptions alive.

Bullion was near US$4,485 an ounce, after falling 1.2 per cent on Monday (Jun 1). Against a backdrop of fresh clashes near the Strait of Hormuz, US President Donald Trump said that talks were continuing at a rapid pace and that Israel and Hezbollah had agreed to stop attacking each other. Iran, meanwhile, threatened to suspend diplomatic exchanges and completely close the key waterway.

The confusion roiled markets, with oil clocking its biggest gain in about a month on Monday while bond yields and the US dollar climbed.

Meanwhile, US manufacturing activity in May expanded at the fastest pace in four years, according to data released on Monday. With economic growth buoyed for a fifth straight month, the US Federal Reserve may have less reason to ease monetary policy to stimulate consumption. Higher rates for longer would be a headwind for gold, which does not pay interest.

Spot gold was little changed at US$4,486.28 an ounce as at 7.07 am in Singapore. Silver gained 0.2 per cent to US$74.97 an ounce. Platinum and palladium edged higher. The Bloomberg Dollar Spot Index was flat, having ended the previous session up 0.3 per cent. BLOOMBERG