NEW YORK: Gold prices held steady on Thursday, as markets monitored US-Iran developments and their implications for inflation and interest rates.
Spot gold was little changed at USD4,789.09 per ounce as of 11:00 a.m. ET (1500 GMT), after hitting a one-month high in the previous session.
US gold futures fell 0.3 percent to USD4,810.90.
“If we do see some type of easing of US-Iran tensions or an end to the war, there will be a stronger likelihood of Federal Reserve rate cuts down the road… And that could support the precious metals complex,” said David Meger, director of metals trading at High Ridge Futures.
Optimism grew that the Iran war may be near an end, with a source saying a Pakistani mediator had made a breakthrough on “sticky issues”, although Iran said the fate of its nuclear program had not been resolved.
Gold prices initially fell when the US and Israel launched the war on Iran in late February, with liquidity pressures and inflation concerns as energy prices soared prompting markets to dial back expectations of interest rate cuts. As a zero-yielding asset, gold tends to lose appeal when interest rates are high.
Currently, traders see a 32 percent chance of a US interest rate cut this year.
Data showed that new applications for US unemployment benefits fell last week, suggesting labor market conditions remained stable, though employers are cautious about increasing headcount as the war with Iran casts a shadow over the economy.
Among other metals, spot silver fell 0.7 percent to USD78.53 per ounce. The silver market is heading for a sixth year of structural deficit, with 762 million troy ounces drawn from stocks since 2021, raising the risk of a renewed liquidity squeeze despite weaker demand expectations, the Silver Institute and consultancy Metals Focus said on Wednesday.
Platinum lost 0.7 percent to USD2,095.06 and palladium was down 0.7 percent at USD1,578.06.