Gold steadied after its biggest daily advance since late March, as hopes of a US-Iran deal to end the the war sent oil prices plunging and eased inflation concerns.
Bullion traded above $4,690 an ounce, after jumping 3% on Wednesday. Falling energy prices weighed on bond yields, while the dollar fell to pre-war levels, tailwinds for gold that’s priced in the US currency and doesn’t offer interest.
Iran is evaluating a fresh proposal from the US to end the near 10-week conflict, according to a person familiar with the matter, as China added its voice to global pressure to wrap up the war. The US will end its military campaign and lift its blockade of the Strait of Hormuz “assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption,” President Donald Trump posted on social media.
“Headlines of a potential peace deal have the precious metals and base metal complex on the front foot this morning,” TD Securities strategists including Ryan McKay said in a note. “We caution these headlines remain extremely fragile to reversal as US and Iranian demands seemingly remain unchanged compared to prior proposals.”
While markets priced in hope, Federal Reserve Bank of Chicago President Austan Goolsbee struck a note of caution, noting inflation has not only failed to continue cooling to the US central bank’s 2% target, but moved up since the start of the war. Gold has fallen about 11% since the conflict erupted in late February, as the closure of Hormuz and resulting energy price shock dimmed the prospect of interest-rate cuts.
Spot gold was steady at $4,692.98 an ounce at 7:41 a.m. in Singapore. Silver rose 0.1% to $77.44 after jumping 6.2% on Wednesday. Platinum was flat, while palladium edged higher. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed after falling 0.6% in the previous session.
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