NEW YORK: Gold rose about 1percent on Wednesday after falling to more than a one-week low in the previous session, as longer-dated US Treasury yields fell and on bargain-hunting even as investors await a possible resumption of US-Iranian peace talks.
Spot gold was up 0.8percent at USD4,749.61 per ounce by 9:42 a.m. EDT (1342 GMT), after rising 1percent earlier in the session. On Tuesday, it recorded its largest daily loss since March 26. US gold futures for June delivery gained 1percent to USD4,767.70.
Gold is seeing “a bit of a reprieve as rates along the curve dropped here and on the hope that the Strait of Hormuz business gets worked out after Donald Trump’s statements. But the situation is very tenuous and uncertain,” said Bart Melek, global head of commodity strategy at TD Securities.
Iran on Wednesday seized two ships in the Strait of Hormuz, which handles about 20percent of the world’s oil supply, after US President Donald Trump called off attacks indefinitely to allow Tehran to come up with a unified peace proposal. There is, however, no sign of peace talks restarting.
Benchmark 10-year US Treasury yields fell 0.24percent. “Perceived bargain-hunting after Tuesday’s losses is also featured in (gold and silver) precious metals markets,” said Jim Wyckoff, senior analyst at Kitco Metals.
Gold prices have fallen close to 11percent since the war began on February 28, as rising oil prices have stoked inflation fears. While bullion is seen as an inflation hedge, higher interest rates dampen demand for the non-yielding metal. Federal Reserve chief nominee Kevin Warsh said on Tuesday he had made no promises to Trump about cutting interest rates, as he tried to assure US senators considering his confirmation that he would act independently of the White House while pursuing broad reforms.
Spot silver rose 1.6percent to USD77.92 per ounce, platinum gained 2.1percent to USD2,079.21, and palladium was up 1.5percent at USD1,556.49.
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