Gold prices dropped 1% as investors assessed prospects for a ceasefire in the Middle East, with oil prices rising and expectations for US rate cuts evaporating.
GOLD prices fell on Thursday, retreating after two sessions of gains as markets evaluated the potential for de-escalation in the Middle East.
Spot gold dropped 1% to USD 4,476.51 per ounce by 0555 GMT. US gold futures for April delivery declined 2.1% to USD 4,457.
The move came amid mixed signals over conflict resolution. US President Donald Trump stated Iran was desperate to make a deal to end the fighting.
This contradicted Iran’s foreign minister, who said the country was reviewing a US proposal but had no intention of holding talks to wind down the conflict.
“In the next 24 to 48 hours, (gold prices) will just be about reacting to headlines about negotiations,” said Capital.com senior financial market analyst Kyle Rodda.
“The really big moves will happen probably at the start of next week when it becomes clearer whether the US launches a ground invasion in Iran over the weekend.”
White House press secretary Karoline Leavitt said Trump has vowed to hit Iran harder if Tehran fails to accept it has been “defeated militarily”.
Brent crude futures climbed back above USD 100 a barrel on supply disruption fears. Since the war began, Iran has attacked nations hosting US bases and effectively closed the Strait of Hormuz.
The strait handles a fifth of the world’s oil and liquefied natural gas. Higher crude prices can 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. Markets now see almost no chance of a Federal Reserve rate cut this year, according to CME Group’s FedWatch Tool.
Before the conflict, markets were expecting at least two cuts. Among other precious metals, spot silver fell 1.9% to USD 69.90 per ounce.
Spot platinum was down 1.4% at USD 1,893.60. Palladium dropped 2% to USD 1,394.83.
The Sun Malaysia
