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Gold Falls as Traders Weigh Next Round of US-Iran Peace Talks - BLOOMBERG
BY Yihui Xie and Preeti Soni
(Bloomberg) -- Gold declined as traders weighed prospects for a negotiated settlement to the Iran war that’s disrupted global energy supplies and heightened inflation risks.
Bullion fell as much as 1% to trade below $4,800 an ounce, having lost 0.2% in the previous session. US President Donald Trump said his vice president, JD Vance, is ready to leave for negotiations in Islamabad, while Iran didn’t confirm who, if anyone, would travel from Tehran to the Pakistani capital. Trump said a two-week ceasefire is due to expire on “Wednesday evening Washington time” and unlikely to be extended.
Markets remain “on edge over whether fresh peace talks would materialize before the ceasefire expires this week, with conflicting signals from both sides adding to volatility,” Manav Modi, commodity analyst at Mumbai-based Motilal Oswal Financial Services Ltd., said in a note. “With uncertainty around both geopolitics and policy outlook persisting, gold remains under pressure.”
Oil prices slipped on Tuesday, while global equities resumed a rally after a brief pause. Now in its eighth week, the war in the Middle East has triggered an unprecedented energy-supply shock that has intensified inflationary pressures, making central banks more likely to hold interest rates steady or even raise them — a headwind for non-yielding bullion. Gold has lost about 10% since the conflict began in late February.
“Some repositioning and deleveraging during times of cross-asset volatility should be expected,” Marc Loeffert, a trader at Heraeus Precious Metals GmbH, wrote in a note. “This volatility is likely to last for some time but, in the long run, gold will retain its fundamental attraction as a way to retain purchasing power.”
Investors will also be watching Trump’s pick to head the Federal Reserve later Tuesday when Kevin Warsh maps out his plans before the Senate Banking Committee. Any sense that Warsh will push for monetary easing this year would likely support bullion, while greater caution around inflation — and a reluctance to cut rates — would be negative for gold.
In a nod to concerns about the Fed’s future, Warsh will vow to protect the central bank’s independence, according to a copy of his prepared remarks viewed by Bloomberg News.
