Gold held gains on dip-buying even as hostilities in the Middle East pushed oil prices to multiweek highs, rekindling concerns that US inflationary pressure could prompt the Federal Reserve to raise interest rates.
Bullion was trading around $4,120 an ounce, after rising 3% over the previous two days as dip-buying supported prices. This came as the US and Iran signaled that they aren’t ready to return to the negotiating table after escalating attacks.
Strikes on tankers transiting the Red Sea were also reported, the first since the conflict began in late February and potentially widening it. The waterway has been a vital workaround in particular for Saudi Arabian crude oil blocked behind the Strait of Hormuz. Yemen’s Iran-backed Houthis claimed responsibility.
Traders are now weighing the impact of higher energy prices against soft US economic data as they scan for clues about the Fed’s path for interest rates. Elevated borrowing costs are a headwind for non-yielding bullion.
Gold had largely moved in an inverse relationship to treasury yields during the conflict until holding above the $4,000 mark this week, which some traders see as a support level. It is still down by around a fifth since the US and Israel launched strikes on Iran in late February, after a multiyear bull run that had carried the metal to a record high near $5,600 the month before.
Spot gold was 0.2% lower at $4,120.28 an ounce as of 7:35 a.m. in Singapore. Silver slid 0.4% to $59.50 an ounce. Platinum and palladium also edged lower. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after ending the earlier session little changed.
This article was generated from an automated news agency feed without modifications to text.
