Gold steady as traders track Strait of Hormuz stalemate, inflation risks

[SINGAPORE] Gold was steady as traders assessed the deadlock in the Strait of Hormuz that has sent oil prices higher and added further fuel to inflation concerns.

Bullion traded near US$4,740 an ounce, after gaining 0.4 per cent on Monday (May 11). Trump called Iran’s response to last week’s US peace proposal “a piece of garbage” and said the fragile ceasefire in the Strait of Hormuz was on “massive life support”, providing no end in sight to the conflict that has roiled global energy markets.

The president’s comments on the conflict come ahead of a key US inflation report on Tuesday. Economists expect a sharp rise in the consumer price index after the Iran war triggered price surges that are rippling through manufacturing and farming.

Trump mounted a new push to tackle affordability on the eve of the report, taking aim at surging beef and petrol prices that may threaten his party’s hold on Congress.

The US dollar and bond yields trimmed gains on Monday, which are positive moves for gold that is priced in the greenback and pays no interest. Silver also surged more than 7 per cent, the most in more than a month, as technical signals attracted new buying.

Spot gold rose 0.1 per cent to US$4,742.02 an ounce as at 6.28 am in Singapore. Silver gained 0.4 per cent to US$86.42. Platinum and palladium advanced. The Bloomberg Dollar Spot Index was 0.1 per cent higher than the previous session. BLOOMBERG