NEW YORK: Gold rose on Tuesday, rebounding from a near one-week low hit in the previous session, as hopes of a resolution in the Iran war pressured the dollar and pushed oil prices lower, easing inflation concerns.
Spot gold was up 0.9percent at USD4,782.19 per ounce as of 1128 GMT, after rising more than 1percent earlier in the session. US gold futures for June delivery rose 0.8percent to USD4,804.70.
Bullion fell to a near one-week low in the previous session as the US military prepared to blockade Iran’s ports, angering Tehran and putting a fragile two-week ceasefire at risk. Negotiating teams from the US and Iran could return to Islamabad later this week, five sources said on Tuesday, days after talks between the two countries ended with no breakthrough.
“The focus remains firmly on developments in the Middle East and the prospects for a resolution. In my view, a de-escalation could ultimately prove supportive for precious metals, particularly if it weighs on the dollar,” said Ole Hansen, head of commodity strategy at Saxo Bank. The US dollar fell to its lowest level in more than a month, making dollar-denominated gold more affordable for holders of other currencies.
Oil prices fell in Asian trade, as concerns about supply risks were allayed by signs of possible talks to end the US-Iran war. Crude prices have risen about 40percent since the Middle East conflict began, stoking inflation fears.
While bullion is seen as a hedge against inflation and geopolitical uncertainty, the non-yielding metal’s appeal fades in a high interest-rate environment.
Traders currently expect a 31percent chance of a 25-basis-point US rate cut this year, up from 27percent the previous day. Before the war, traders had anticipated two rate cuts for this year.
“In the near term, gold remains range-bound with no clear breakout signal. However, the longer the current consolidation persists, the greater the likelihood that the eventual move, at this stage, leans to the upside,” Hansen added.
Among other metals, spot silver rose 2.8percent to USD77.65 per ounce, platinum gained 0.3percent to USD2,076.50, while palladium inched 0.1percent lower at USD1,572.62.
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