NEW YORK: Gold prices were steady on Monday, as traders stayed cautious ahead of upcoming central bank meetings, wary that persistent strength in oil prices could prompt a more hawkish policy stance. Spot gold was flat at USD4,707.16 per ounce, as of 1100 GMT. US gold futures for June delivery fell 0.4percent to USD4,722.60.
“The main message that traders are preparing for is that central banks will be more hawkish than they were previously because of the fact that oil prices have risen and pushed inflationary pressures up,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. “Because of that, the (gold) market will be cautious heading into the central bank meetings.”
Brent oil climbed above USD105 per barrel, as shipments through the Strait of Hormuz remained limited, keeping global oil supplies tight.
Higher oil prices since the onset of the US-Israel war on Iran have stoked inflation fears and concerns around elevated interest rates. While gold is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing on its appeal.
The Fed is widely expected to hold interest rates steady in its policy statement on Wednesday at the end of its two-day meeting on April 28 to 29.
Investors will also be watching other central bank meetings this week, including the Bank of Japan, the European Central Bank and the Bank of England, to gauge the impact of the war on the economy and the path for interest rates.
Meanwhile, the dollar eased, making greenback-priced bullion more affordable for holders of other currencies. US President Donald Trump said Iran could telephone if it wants to negotiate an end to their two-month war, as Tehran’s foreign minister landed in Russia on Monday to seek support from President Vladimir Putin.
Hopes of reviving peace efforts receded on Saturday after Trump cancelled a trip by two US envoys to Iran war mediator Pakistan. Spot silver added 0.2percent to USD75.82 per ounce, platinum gained 0.5percent to USD2,020.44, and palladium was down 0.6percent at USD1,486.99.
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