Gold rebounded on Tuesday from a near one-week low hit the day before, as oil prices fell on hopes of further U.S.-Iran peace talks, easing inflation fears.
Spot gold was up 0.6 per cent at $4,768.19 per ounce, as of 0237 GMT, after hitting its lowest level since April 7 in the previous session. U.S. gold futures for June delivery rose 0.5 per cent to $4,790.70.
Oil prices fell below $100 a barrel as signs of potential U.S.-Iran dialogue to end their war eased concerns about supply risks stemming from the U.S. blockade of the Strait of Hormuz.
Higher crude prices feed into inflation by raising transportation and production costs. While inflation typically boosts gold’s appeal as a hedge, elevated interest rates weigh on the non-yielding metal’s demand.
Markets appear to think that there’s still time for a deal between the United States and Iran, said Ilya Spivak, head of global macro at Tastylive.
Reuters reported negotiations between Washington and Tehran
were still alive while U.S. Vice President JD Vance said in an
interview the U.S. expected Iran would make progress on opening
the Strait of Hormuz.
Meanwhile, the U.S. military began a blockade of Iran’s
ports on Monday, President Donald Trump said, and Tehran
threatened to retaliate against its Gulf neighbours’ ports after
weekend talks in Islamabad on ending the war broke down.
Additionally, the U.S. dollar hovered near its lowest level in more than a month, making the greenback-denominated gold more affordable for holders of other currencies.
“Near-term, a thin macro calendar might make U.S.-Iran headlines the driving engine. That sets the stage for choppy price action for now,” Spivak said, adding that gold could face resistance around $4,850 levels.
Traders now see a 29 per cent chance of a 25-basis-point U.S. rate cut this year, up from about 12 per cent last week. Before the war, there were expectations of two cuts for this year.
Among other metals, spot silver rose 0.9 per cent to $76.27 per ounce, platinum gained 0.1 per cent to $2,071.75, and palladium was up 0.2 per cent at $1,576.23.