Gold climbs as Iran-US talks ease inflation fears

Gold jumped as signs that the U.S. and Iran are close to a deal that would reopen the Strait of Hormuz helped temper inflation concerns, News.Az reports, citing Bloomberg.

Bullion rose as much as 1.6% to around $4,580 an ounce, erasing a moderate loss from the previous week.

Negotiations on the precise wording of the deal were still ongoing, and it may take several days for both sides to secure final approval, US officials told reporters on Sunday.

President Donald Trump said on social media that he would not “rush” into an agreement.

Earlier, US Secretary of State Marco Rubio said there may be “some good news” regarding Hormuz in the coming hours, as Tehran and Washington continued peace negotiations.

Gold’s reaction to the headlines was still described as “relatively muted,” said Justin Lin, analyst at Global X ETFs in Sydney. He noted that markets have previously seen announcements from Trump “fizzle into nothing,” and said more concrete evidence of cooperation from Iran would be needed before confirming further gains.

Bullion remains down about 13% since the conflict began in late February. Traders have increased rate-hike bets, as the Iran war has pushed energy prices higher. Money markets are now pricing in that the Federal Reserve is virtually certain to begin raising rates by December. Higher interest rates typically weigh on gold, which does not yield interest.

As incoming Federal Reserve Chair Kevin Warsh prepares to take office, investors will be watching closely for signals on his economic stance.

There may also be reluctance to chase gold’s rebound, given that key details around Iran’s nuclear programme remain unclear, said Christopher Wong, strategist at Oversea-Chinese Banking Corp. Markets in the United States, United Kingdom, Hong Kong, and South Korea were also closed for holidays on Monday, leading to “thinner holiday liquidity,” he added.

Spot gold was up 1.2% at $4,562.24 an ounce at 10:30 a.m. in Singapore. Silver rose 3% to $77.79, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, which tracks the US currency, was down 0.3%.

News.Az 

By Nijat Babayev