Gold rises as traders weigh potential to revive US-Iran talks
Despite a moderate recovery in recent weeks, bullion has still fallen around 10% since the start of the conflict in late February
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[SINGAPORE] Gold edged higher after a two-day decline, as renewed optimism for a negotiated end to the US-Iran war eased concerns around inflation.
Bullion was near US$4,765 an ounce in early trading, regaining most of the 0.6 per cent given up over the previous two sessions. Even as the US began a naval blockade of the Strait of Hormuz, US President Donald Trump said that Iranian officials had approached his administration with the desire “to work a deal”.
Separately, Iranian President Masoud Pezeshkian said that Teheran was prepared to continue peace talks within the framework of international law.
Oil declined and was below US$100 a barrel, while equities rallied on Monday (Apr 13) and a gauge of the dollar slipped 0.2 per cent, supporting gold that’s priced in the US currency. The retreat in energy prices relieved some of the inflationary pressure that has weighed on bullion since the war began more than six weeks ago, which has led traders to bet that central banks will hold interest rates steady for longer, or even hike them, a headwind for non-yielding commodities.
Still, concerns of further energy-supply shocks and economic pain linger, especially as the US blockade of Hormuz ratchets up pressure on Iran. The American navy is moving to cut off vessels in the strategic waterway from transiting to and from Iranian ports and coastal areas. With tensions still high, US money markets are still pricing in a less-than-one-fifth chance that the US Federal Reserve will cut interest rates by December.
Despite a moderate recovery in recent weeks, bullion has still fallen around 10 per cent since the start of the conflict in late February. A liquidity squeeze in the earlier days of fighting saw investors offloading their gold holdings to cover losses elsewhere.
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Spot gold rose 0.5 per cent to US$4,765.03 an ounce as at 7.11 am Singapore time. Silver climbed 0.4 per cent to US$75.88 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the greenback, was little changed. BLOOMBERG
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