Gold holds gain as Trump sounds optimism over US-Iran talks
The metal has stayed near US$4,000 an ounce since late June, supported by a wave of dip-buying
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[SINGAPORE] Gold held a gain on Tuesday (Jul 28) after US President Donald Trump said that the US and Iran were in talks to end the war that has stoked inflationary concerns and raised the likelihood of higher interest rates.
Bullion was near US$4,075 an ounce in early trading, after advancing 0.6 per cent on Monday.
Trump said there is “a good chance that something could happen” regarding a deal, comments that appeared to reduce the immediate prospect of military escalation. The US leader added, however, that a return to fighting is likely if negotiations do not yield a deal.
Oil extended a drop on Tuesday after Washington held off attacking Iran for a third straight day. Teheran, in turn, has paused strikes on countries around the Persian Gulf.
Gold has hovered near US$4,000 an ounce since late June, with a wave of dip-buying keeping the metal above the psychological threshold viewed by some traders as a key support.
Bullion is down by more than a fifth since the war began on Feb 28, helping to end a multi-year bull run that had carried it to a record near $5,600 in late January.
Traders are now positioning themselves for a potentially contentious rate decision by the Federal Reserve this week, as a recent rise in energy costs that accompanied renewed fighting in the Middle East clashes with a tamer-than-expected reading on US consumer prices in June.
Interest rate swaps imply about a 40 per cent chance of a quarter-point increase on Wednesday, an unusually high degree of uncertainty so close to a Fed decision by the standards of recent years.
Citadel Securities said it expects a hike this week, a move it argues would strengthen chairman Kevin Warsh’s credibility in the battle with inflation.
Spot gold slipped 0.1 per cent to US$4,073.05 an ounce at 7.20 am in Singapore. Silver edged up 0.1 per cent to US$58.41 an ounce.
Platinum and palladium were down slightly. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose marginally after ending the earlier session little changed. BLOOMBERG
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