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MarketFlick Insights
Gold set to end three-day slide as US Iran talks ease oil-driven inflation fears
At a glance
- •Spot gold rose 0.55% to $4,183.08/oz; U.S. gold futures near $4,204.84.
- •Progress in U.S.-Iran talks reduced risk of prolonged energy supply disruption and helped push Brent crude about 3% lower.
- •Lower oil prices eased inflation concerns, supporting bullion, but gains were limited by expectations of higher-for-longer U.S. interest rates.
- •U.S. Dollar Index remained close to a 13-month high, acting as a headwind for commodities.
- •Investors are focused on the upcoming U.S. PCE inflation reading for guidance on monetary policy.
- •Silver, platinum and copper all posted gains amid improved risk sentiment.
Market Analysis
Gold rebounded on Monday and looked poised to end a three-session losing streak after reports of progress in U.S.-Iran talks helped push oil prices lower and eased some near-term inflation worries. Spot gold was trading up 0.55% at $4,183.08 an ounce by 09:33 ET (13:33 GMT), while U.S. gold futures (GC) slipped nearly 1% to $4,204.84.
Bullion entered the week after a 1.4% decline last week and three consecutive sessions of losses. Traders said the metal found support when Iranian officials including Foreign Minister Abbas Aragchi described major progress in quadrilateral talks held in Switzerland. Mediators from Qatar and Pakistan said negotiators agreed on a roadmap toward a broader settlement, and technical discussions were expected to continue through the week. Those diplomatic developments reduced the risk of a prolonged disruption to Middle East energy supplies.
Lower crude prices, in turn, took pressure off inflation expectations and tempered the prospect that energy-driven price rises would force the Federal Reserve into a more aggressive tightening cycle. Brent crude fell about 3%, erasing earlier gains after the diplomatic signs emerged despite continued tensions around the Strait of Hormuz.
Still, gains in gold were capped by the still-high level of U.S. interest rates. Markets are digesting last weeks Federal Reserve meeting, where policymakers maintained a hawkish stance and left the possibility of further rate rises on the table amid persistent inflation risks. ING analysts noted that while geopolitical risks should continue to provide underlying support for bullion, a higher-for-longer U.S. rate environment may limit near-term upside.
The U.S. Dollar Index held firm near a 13-month high reached last week, an additional headwind for dollar-priced commodities. Investors are also awaiting a key inflation gauge the U.S. Personal Consumption Expenditures (PCE) price index later this week for fresh clues on the path of monetary policy.
Other metals and industrials
Other precious metals outperformed on the session. Silver jumped about 2.5% to $66.55 per ounce, while platinum climbed roughly 2% to $1,699.84/oz. On the industrial side, benchmark copper futures on the London Metal Exchange rose 0.9% to $13,719.70 a ton, and U.S. copper futures traded about 0.6% higher at $6.37 a pound.
Overall, the market snapshot showed risk sentiment improving on diplomatic progress in Switzerland, which weighed on energy prices and eased some inflation concerns offering temporary support to precious metals even as elevated U.S. rates and a strong dollar kept a lid on any sustained rally.
Ayushman Ojha contributed contributed.
