(Bloomberg) — Gold advanced on optimism that the US and Iran are moving toward talks after days of deadlock, with traders also asessing the Federal Reserve’s interest rate path after the Justice Department dropped a probe of Chair Jerome Powell.
Bullion rose above $4,700 an ounce as bond yields fell after US Attorney Jeanine Pirro said she’s dropping her investigation into building-renovation cost overruns by the Fed.
Iran’s Foreign Minister Abbas Araghchi is due in Islamabad on Friday and a second round of peace talks between the US and Iran is expected, according to officials in Pakistan familiar with the matter. Iranian media said he was on a “regional tour” and would also visit Oman and Russia.
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President Donald Trump will send US special envoy Steve Witkoff and Jared Kushner to Pakistan for talks with Araghchi this weekend, CNN reported, citing two administration officials.
Higher energy prices since the war began in late February have stoked concerns about persistently high price pressures, something that may prompt the Federal Reserve and its peers to keep interest rates elevated for longer or even raise them further. That’s negative for non-yielding bullion.
Bullion has traded in a tight range in recent weeks as traders navigate a steady stream of shifting headlines from the Middle East conflict. It’s still down about 10% since the war began in late February as investors initially sold the precious metal to raise cash in the early stage of the war.
Meanwhile, the ending of a controversial investigation into building-renovation cost overruns by the Fed potentially cleared a path to confirmation for Kevin Warsh, President Donald Trump’s pick to be the next Fed leader.
Warsh is known for his hawkish stance on inflation. Investors don’t expect him to deliver the aggressive rate cuts urged by Trump, but rather pursue a measured approach with gradual moves to lower borrowing costs.
Elsewhere, the State Oil Fund of Azerbaijan, one of the largest sovereign gold buyers, released data showing it had sold nearly 22 tons of the precious metal in the first quarter, an amount worth more than $3 billion at current prices. Rapid price gains meant gold’s share of the fund’s portfolio was straining its target upper threshold of 35%, creating a need to rebalance the holdings.
Spot gold rose 0.7% to $4,729.07 an ounce as of 11:57 a.m. in New York. Silver was up 1% at $76.44 an ounce. Platinum fell, while palladium gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, dropped 0.2%.
–With assistance from Yihui Xie and Jack Ryan.
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