Gold holds gain as renewed push for US-Iran talks eases risks
It has fallen about 8 per cent since the start of the conflict
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GOLD held a gain on optimism that the US and Iran are seeking a negotiated settlement to the war, easing inflation concerns arising from an energy-supply shock.
Bullion was near US$4,840 an ounce in early trading, after rising 2.1 per cent in the previous session.
Washington and Teheran are looking to arrange a second round of peace talks in the coming days, according to people familiar with the matter, while US President Donald Trump said negotiations could resume “over the next two days,” the New York Post reported.
Oil steadied on Wednesday, while US equities surged on Tuesday and a gauge of the dollar fell 0.3 per cent, supporting gold that’s priced in the US currency.
A recent retreat in energy prices has relieved some of the inflationary pressure that has weighed on bullion since the war began more than six weeks ago.
Concern about rising consumer prices had led traders to bet that central banks will hold interest rates steady for longer or even hike them — a headwind for non-yielding bullion.
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Gold has fallen about 8 per cent since the start of the conflict, with a liquidity squeeze in the early weeks of fighting leading investors to offload holdings and cover losses elsewhere.
“Beyond near-term liquidity needs, we expect gold to continue to rebuild its gains in the coming months amid heightened geopolitical risk,” analysts from Standard Chartered Plc including Sudakshina Unnikrishnan said in a note.
The situation in the Middle East remains fragile as a standoff persists around the Strait of Hormuz, the maritime chokepoint that links the Persian Gulf to global markets.
The US is pressing ahead with a naval blockade to curb Iran’s oil exports, while Tehran is considering a short-term pause to shipments.
Even if the war were to end, disruption to energy supplies is likely to persist, with key energy infrastructure in the Gulf region having suffered damage from missile and drone strikes.
Spot gold edged down 0.1 per cent to US$4,838.53 an ounce at 7.13 am Singapore time. Silver slipped 0.2 per cent to US$79.42 an ounce, having risen more than 5 per cent on Tuesday. Platinum and palladium fell marginally. The Bloomberg Dollar Spot Index was little changed. BLOOMBERG
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