NEW YORK: Gold prices fell as the dollar firmed, investors remaining cautious as they looked to tentative US-Iran talks and a Senate confirmation hearing for Federal Reserve Chairman nominee Kevin Warsh later on Tuesday.
Spot gold was down 0.9 percent to USD4,776.49 per ounce at 9:33 a.m. EDT (1333 GMT). US gold futures for June delivery fell 0.7 percent to USD4,795.40.
The US dollar edged higher, making greenback-priced bullion more expensive for other currency holders.
“Markets are hesitant about a potential deal between the US and Iran, given the weekend’s developments and mixed rhetoric. This is keeping bulls in check for now and may confine gold to a tight range until certainty arrives,” said Zain Vawda, analyst at MarketPulse by OANDA.
Gold could trade between USD4,750 and USD4,850, with any move above this hinging on Middle East announcements, he added.
In an interview with CNBC, US President Donald Trump sent mixed signals on talks due to resume in Islamabad. A senior Iranian official said Tehran was considering attending, even as the country’s foreign ministry condemned a US attack on the Iranian commercial vessel Touska over the weekend.
Oil prices fell on expectations that peace talks will lead to more supply flowing from the key Gulf producing region, even though Trump, who said he remained optimistic for a deal with Iran, stated he did not want to extend a ceasefire due to expire within hours.
Inflation fears have risen with oil prices, which have surged since the US and Israel launched the war on Iran on February 28. Although gold is seen as an inflation hedge, demand for the non-yielding asset suffers when interest rates are high.
Former Fed Governor Warsh takes the next step to becoming head of the US central bank, with a Senate Banking Committee hearing due to begin at 10 a.m. EDT (1400 GMT).
“Investors fear higher rates, but a confirmed ‘team player’ could boost gold. However, the reaction could be muted as the situation is vastly different now than it was prior to the war,” Vawda added.
Among other precious metals, spot silver fell 1.6 percent to USD78.64 per ounce, platinum lost 0.8 percent to USD2,073.05, while palladium was up 1 percent at USD1,566.75.