LONDON: Gold trimmed losses to recover from a four-month low on Monday after US President Donald Trump postponed strikes on Iranian infrastructure, but prices were still down for a ninth straight session as bets on higher rates dimmed the metal’s appeal.
Spot gold fell 1.8 percent to USD4,407.06 per ounce by 1:30 p.m. ET (1730 GMT), after falling over 8 percent earlier in the session. It posted its worst weekly performance since 1983 on Friday.
US gold futures settled 3.7 percent lower at USD4,407.30.
“The overnight sell-off was a continuation of the long liquidation we’ve seen over the past several sessions, driven largely by expectations of rising interest rates. The dramatic reversal came after Trump’s post on Truth Social. The headline triggered broad reversals across markets - metals, energy and equities alike,” said David Meger, director of metals trading at High Ridge Futures.
“It’s fair to assume that we’re going to see volatility continue.” Higher energy prices due to the Iran war have lately increased bets on rates staying higher for longer. Gold, despite its reputation as an inflation hedge and safe haven, has struggled to benefit as elevated rates raise the opportunity cost of holding the non-yielding metal.
Trump said he had given orders to postpone for five days the attacks he had threatened against Iranian power plants, and said the US was in talks with Tehran about ending the US-Israeli war on Iran. However, Parliamentary Speaker Mohammad Baqer Qalibaf, mooted to be the leader representing Iran in contacts with the US, posted on social media that no talks had been held.
Following Trump’s comments, oil prices plunged and the dollar moved lower. A weaker dollar makes greenback-priced bullion more affordable to other currency holders. Spot gold prices have fallen over 15% since the Middle East conflict began on February 28, and has retreated about 20 percent from its record peak of USD5,594.82 reached on January 29.
Elsewhere, spot silver rose 2.5 percent to USD69.47, while platinum slipped 2.7 percent to USD1,868.95. Palladium added 1.7 percent to USD1,426.77. Nornickel, the world’s biggest palladium producer, said demand for the metal from China’s fibreglass industry could reach 0.8 million ounces per year over the medium term.
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