Gold holds gain as Trump touts reopening of Hormuz this week

[SINGAPORE] Gold held a gain after US President Donald Trump said that the Strait of Hormuz could reopen on Friday (Jun 19), likely easing an energy and inflation shock that has roiled global markets.

Bullion was near US$4,310 an ounce, having climbed 2.2 per cent in the previous session after the US and Iran announced an interim deal to end the war and lift their maritime blockades in the region. Adding a note of caution, however, US allies were less optimistic about how quickly flows of energy and other commodities via the strategic waterway could resume.

Oil held losses, with West Texas Intermediate trading near US$81 a barrel after sinking almost 5 per cent on Monday. Brent ended near US$83.

Gold is down about 18 per cent since the US and Israel launched strikes on Iran in late February. It’s moved largely in an inverse relationship to crude during the war, as higher energy prices have fuelled inflation and prompted central banks to keep rates higher for longer, dimming the appeal of non-yielding precious metals.

Precious metals traders are awaiting a series of central bank decisions this week, with the US Federal Reserve set to meet under new chair Kevin Warsh for the first time. Market expectations are geared towards a rate hike later this year.

Spot gold edged down 0.1 per cent to US$4,307.20 an ounce as at 6.30 am in Singapore. Silver slid 0.2 per cent to US$69.87. Platinum and palladium were also down marginally. The Bloomberg Dollar Spot Index, a gauge of the US currency, ended the previous session 0.1 per cent lower. BLOOMBERG