NEW YORK: Gold rose on Friday, but was on track for its first weekly loss in the last five weeks, as lingering inflation concerns and the uncertain state of the US-Iran war kept markets on edge.
Spot gold was up 0.6percent at USD4,721.15 per ounce at 01:41 p.m. ET (1741 GMT), having risen more than 1percent earlier in the session, and is down more than 2percent so far this week.
US gold futures for June delivery settled 0.4percent higher to USD4,740.90.
The precious metal slumped throughout March as the US-Iran war strengthened the dollar and stoked fears of higher inflation that weighed on demand for gold.
More recently, the conflict has been at a standstill, with the crucial Strait of Hormuz still closed even though military strikes by any of the nations involved have dwindled.
That has left investors to fill in the blanks or react to US President Donald Trump’s statements, which offset expectations for a deal to end the conflict with threats to resume attacks.
Iran’s Foreign Minister Abbas Araqchi was expected in the Pakistani capital Islamabad on Friday to discuss proposals for restarting peace talks with the United States, but was not due to meet US negotiators, Pakistani government sources said.
Separately, Israel and Lebanon extended their ceasefire for three weeks. “It’s really just a headline-driven market because of all the uncertainty - the headlines right now seem to favour some kind of peace agreement with Iran, the market is looking at a net positive situation currently. Energies are coming off a little bit too,” said Daniel Pavilonis, senior market strategist at RJO Futures.
Oil prices ebbed on Friday, but those benchmarks have surged this week after a second round of talks between the US and Iran failed to materialize, and as Iran flaunted its control over the Strait of Hormuz.
Higher oil prices can stoke inflation, driving up chances of higher interest rates. “Gold saw a fall (this week) because the oil price was going higher, so were expectations of higher rates, the dollar, yields, all correlated,” said UBS analyst Giovanni Staunovo. Benchmark 10-year US Treasury yields were up 1.5percent this week, raising the opportunity cost of holding gold, while the dollar was on track for its first weekly gain in three, making bullion more expensive for holders of other currencies.
Spot silver rose 1.4percent to USD76.49 per ounce, platinum added 0.5percent to USD2,015.98 and palladium gained 2.2percent to USD1,499.75.