NEW YORK: Gold prices rose on Tuesday after hitting a more than one-month low in the previous session, as investors assessed a fragile Middle East truce and the conflict’s potential impact on inflation and interest-rate expectations.
Spot gold was up 1.2 percent to USD4,574.17 per ounce at 11:42 a.m. EDT (1542 GMT), after touching its lowest level since March 31 on Monday.
US gold futures gained 1.2 percent to USD4,585.50.
“We are seeing some bargain hunting after the recent selloff, and oil prices easing are also providing support. The market is going to continue to watch the headlines, but we could see focus shift a little towards economic data,” said Jim Wyckoff, market analyst at American Gold Exchange.
“Gold bulls need a significant fundamental spark to regain their footing,” he added.
The United Arab Emirates said it was under attack from Iranian missiles and drones, even as Washington said a shaky ceasefire was intact despite an exchange of fire the previous day as US forces attempted to force open the Strait of Hormuz.
The narrow waterway, which carries a large share of global oil, fertiliser and other commodity supplies, has been virtually closed since attacks began on February 28, driving up prices around the world.
Oil prices slipped on Tuesday, but losses were limited. Elevated energy prices risk stoking inflation and delaying central banks’ easing cycles.
While gold is traditionally seen as a hedge against inflation and uncertainty, its appeal tends to wane when interest rates are high, as rising yields make non-yielding assets less attractive.
Safe-haven demand remains, even if its influence has weakened as gold is increasingly treated as a risk-sensitive asset, said Fawad Razaqzada, market analyst at City Index.
“Nonetheless, the need to hedge against inflation, alongside persistent central bank buying, has helped limit deeper downside moves so far,” Razaqzada said.
Meanwhile, the release of the US employment report later this week will serve as a test of whether the economy remains resilient enough to keep the Federal Reserve’s monetary policy on hold, or whether a softening labor market could revive the case for rate cuts.
Spot silver firmed 1.1 percent at USD73.49, platinum gained 1.2 percent to USD1,967.35, and palladium rose 1.8 percent to USD1,506.01.
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