(Bloomberg) — Gold steadied as traders digested the latest developments in the standoff between the US and Iran that’s heightened inflation risks and dashed hopes for rate cuts from central banks across the world.
Bullion fluctuated between gains and losses, ultimately closing little changed and marking a second consecutive weekly decline. President Donald Trump on Friday expressed displeasure with the current state of negotiations with Iran — but stopped short of threatening fresh military action in the nine-week conflict that’s upended global energy flows.
Earlier on Friday, Iran’s state-run media said Tehran delivered a new proposal to Washington via Pakistan, which mediated a first round of direct negotiations last month. It wasn’t immediately clear whether Trump’s remarks referred to that proposal.
Gold has lost around 14% since the conflict began at the end of February, as the closure of the Strait of Hormuz and resulting energy price shock dimmed the prospect of interest rate cuts, a headwind for non-yielding bullion.
Elsewhere, the dollar erased earlier losses to end the day slightly higher after Trump threatened to hike tariffs on EU-made automobiles. A stronger greenback makes precious metals more expensive for most buyers.
Still, most analysts are bullish on the precious metal, with the latest data by the producer-funded World Gold Council showing that central banks added gold holdings in the first quarter at the fastest pace in more than a year.
“There’s not a ton of conviction around the near-term trajectory, even if the medium-term bull story, which we agree with, is still broadly consensus,” Greg Shearer, head of precious and base metals research at JPMorgan Chase & Co.
Continued retail buying in China had helped support prices in recent months he said, and the broad trend of central bank accumulation was still intact. A clear de-escalation in the Middle East and an accompanying dip in interest rate expectations and the dollar would mean “it’s game-on again for gold,” he said.
Spot gold closed 0.1% lower at $4,614.21 an ounce in New York. Silver advanced 2.2% to $75.36 an ounce — adding to Thursday’s 3.4% gain. Platinum edged higher, while palladium dipped. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.1% after losing 0.8% on Thursday.
–With assistance from Sybilla Gross.
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