Gold prices pared some losses after
dropping more than 2% earlier on Tuesday, as investors remained
wary about the Middle East conflict amid conflicting signals
over Iran-U.S. talks.
Spot gold was down 0.2% to $4,396.74 per ounce, after falling to $4,097.99 per ounce, the lowest since November 24.
U.S. gold futures for April delivery slipped 1.5% to
$4,340.90.
Iran has denied any negotiations with the U.S. after
President Donald Trump postponed a threat to bomb Iran’s power
grid, citing what he described as productive talks with unnamed
Iranian officials. Tehran launched multiple waves of missiles at
Israel on Tuesday, the Israeli military said.
“It’s all pertaining (to) the event that is unfolding in
this U.S.-Israel-Iran conflict. Key stakeholders are not showing
uniform messaging across the board over here….so what we see
is that markets are in a flux right now,” said Kelvin Wong, a
senior market analyst at OANDA.
Benchmark Brent held above $100 a barrel. Higher crude
prices tend to fuel inflation by pushing up transport and
manufacturing costs.
Although rising inflation typically boosts gold’s appeal as
a hedge, high interest rates weigh on demand for the
non-yielding asset.
Spot gold prices have fallen about 18% since the
U.S.-Israeli war on Iran started on February 28.
“Liquidity needs could keep gold under pressure for four to
six weeks, based on historical trends. Price risks tend to rise
if oil shocks give way to inflation fears or rising debt or
recession risks,” analysts at Standard Chartered said in a note.
“For now, however, markets are torn between inflation shocks
and negative output growth, and the risk of rate hikes.”
Elsewhere, spot silver lost 3.4% to $66.80 per ounce.
Spot platinum fell 2.1% to $1,841.68 and palladium
shed 2.7% to $1,395.25.