(June 30): Gold wavered near US$4,000 an ounce as traders weighed conflicting signals from the US and Iran ahead of fresh talks to end the war that has fuelled global inflationary pressures.
Bullion edged up 0.4% to around US$4,030 after falling as much as 1.8% in early Asian trading. Washington said negotiations with Tehran are due to begin Tuesday in Doha while Iran’s foreign ministry said on Telegram that it would send a delegation of experts but ruled out direct talks.
Separately, Iranian Deputy Foreign Minister Kazem Gharibabadi said Tehran intended to continue with plans to oversee traffic through the Strait of Hormuz. That move is opposed by the US, Europe and Gulf Arab nations, highlighting differences over the future management of the vital waterway.
Gold has lost around 25% since the war began in late February, breaking through key technical levels including the 200-day moving average that maps long-term momentum. Though oil prices have retreated after spiking earlier in the war, expectations remain that central banks will keep interest rates higher for longer. This creates headwinds for non-yielding precious metals.
There are “lingering concerns that the Federal Reserve may keep a hawkish stance despite the sharp decline in energy prices", said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S, while adding that some traders may have gained confidence from gold’s rebound from last week’s low. “However, prices first need to break above US$4,100 before it is reasonable to consider that a short-term low may have been established.”
See also: Gold drops for third day as jitters over US rate outlook worsen
The latest developments in the Middle East come as the US Supreme Court ruled that Federal Reserve Governor Lisa Cook can stay in her job while she fights US President Donald Trump’s bid to oust her over unproven mortgage fraud allegations.
The ruling reinforces the autonomy of the US central bank, which is under pressure to lower rates at a time when some Fed officials have signalled they may need to raise borrowing costs to contain inflation. The latest US inflation data released last week, while high, was within analyst estimates.
Spot gold was up 0.4% at US$4,030.30 an ounce at 8.54am in London. Silver rose 1% to US$58.86 an ounce. Platinum declined while palladium gained 1%. The Bloomberg Dollar Spot Index gained 0.2% after falling for the previous three sessions.
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