Gold climbs geopolitical uncertainty surrounds US-Iran talks

Gold edged higher as traders assessed conflicting signals from the United States and Iran regarding a possible diplomatic resolution to the war, News.Az reports, citing Bloomberg.

Bullion rose as much as 1% to top $4,525 an ounce, largely erasing losses from the previous session.

Against the backdrop of renewed clashes near the Strait of Hormuz, US President Donald Trump said talks with Iran were continuing “at a rapid pace,” countering earlier threats from Tehran to suspend diplomacy and completely close the key waterway.

Trump and Israeli Prime Minister Benjamin Netanyahu also provided differing accounts of a phone call regarding the fighting in Lebanon, underscoring confusion around negotiations aimed at ending the conflict that has triggered a global energy crisis and is now in its fourth month. Oil prices slipped on Tuesday following their biggest gain in about a month.

Gold fell sharply after the conflict began in late February and remains about 14% below its immediate pre-war level, though it has traded within a narrow range over the past few weeks. While bullion is typically considered a safe-haven asset during times of crisis, it has largely moved in an inverse relationship with oil as the energy crisis has raised concerns about higher inflation.

Any resumption of energy and trade flows through the Strait of Hormuz would ease worries about rising consumer prices, increasing the likelihood that central banks could loosen monetary policy. Lower borrowing costs are generally supportive for gold, which does not generate interest.

However, the Federal Reserve may have less incentive to cut rates to support consumption after US manufacturing activity expanded in May at the fastest pace in four years—marking the fifth consecutive month of growth, according to data released on Monday.

Spot gold rose 0.8% to $4,520.83 an ounce at 2:13 p.m. in Singapore. Silver gained 2.2% to $76.51 an ounce, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, which measures the US currency, slipped 0.1%.

News.Az 

By Nijat Babayev