Gold prices traded modestly lower on Thursday as markets weighed optimism over a possible diplomatic breakthrough between the United States and Iran against the pressure of elevated bond yields and a resilient U.S. dollar.
By 05:33 ET (09:33 GMT), spot gold was down 0.2% at US$4,536.09 an ounce, while gold futures declined 0.5% to US$4,536.01 an ounce.
Investor sentiment has increasingly focused on hopes that negotiations could bring an end to the conflict between Washington and Tehran, which has continued for more than two months. President Donald Trump said the United States was in the “final stages” of discussions surrounding a draft peace agreement, although he cautioned that tensions could escalate again, warning that “we’re going to do some things that are a little bit nasty” if talks fail.
Iran has meanwhile stated that it is reviewing the latest proposals submitted by Washington aimed at ending the war.
Markets remain especially attentive to any developments that could reopen the Strait of Hormuz, the crucial shipping corridor off Iran’s southern coastline that has been largely shut to tanker traffic since the outbreak of the conflict in late February. Shipping data referenced in media reports earlier this week indicated that some vessels have recently resumed passage through the route.
Brent crude futures, the global benchmark for oil prices, were last trading lower at US$103.97 a barrel after retreating from levels around US$110 following Trump’s remarks about a potential agreement. Despite the decline, oil remains substantially above pre-conflict levels near US$70 a barrel.
Concerns continue to circulate that a prolonged Middle East conflict could reignite global inflation through higher energy prices, potentially prompting central banks to keep interest rates elevated or tighten policy further.
Gold, which does not generate yield, often struggles to compete in high-rate environments.
At the same time, demand for the U.S. dollar as a safe-haven asset during the geopolitical crisis has reduced some of gold’s appeal. Some investors believe the United States could be comparatively insulated from rising oil prices because of its role as a major energy exporter. A stronger dollar also makes gold more expensive for holders of foreign currencies.
Other precious metals also weakened, giving back part of their recent gains. Spot platinum fell 0.3% to US$1,949.70 per ounce, while spot silver dropped 0.6% to US$75.4065 per ounce.
“Base metals are starting the morning on a cautious footing as markets continue to balance shifting geopolitical signals with a softer macro backdrop,” analysts at Britannia Global Markets said in a note.
Leave a Reply