Spot gold was up 0.4% to US$4,808 an ounce at 11.36am in London, as silver climbed 0.7% to US$79.55 an ounce.
(April 16): Gold gained as a push for a diplomatic resolution to the Iran war eased inflation concerns, despite tensions around the Strait of Hormuz.
Bullion rose as much as 1% to nearly US$4,839 (RM19,114) an ounce, erasing most of a loss in the previous session. The US and Iran are considering a two-week ceasefire extension to allow more time to negotiate an end to the conflict that’s disrupted global markets, according to a person familiar with the matter. But the movement of vessels through Hormuz remains choked, with the US blockading Iranian ships and Tehran keeping the waterway closed to most other traffic.
The two sides have an “in-principle agreement” to pursue diplomacy after inconclusive talks in Pakistan at the weekend, the Associated Press reported. President Donald Trump played down the prospect of renewed fighting on Tuesday, telling Fox Business the near seven-week war was “close to over”.
Brent oil futures were up more than 1% above US$96 a barrel on Thursday, while global stocks hit a record and a gauge of the dollar edged higher. Softer crude prices in recent days have eased concerns about inflation, which had made central banks more likely to hold interest rates steady for longer.
Gold will find support from market volatility as long as President Trump is in the White House, ACG Metals Ltd chairman and chief executive officer Artem Volynets told Bloomberg TV. Recent geopolitical events may spur central bank gold-buying as they shift away from the US dollar, he said.
The swap market is still betting that the US Federal Reserve will hold rates steady this year, a view supported by comments from Fed Bank of St Louis president Alberto Musalem and Fed Bank of Cleveland president Beth Hammack, who said that she foresees rates “on hold for a good while”. Higher borrowing costs are a headwind for non-yielding bullion.
“Given the fragile ceasefire and switch to focus on real yields, gold is not yet out of the woods,” Suki Cooper, global head of commodities research at Standard Chartered plc, wrote in a note. With the competing risks of inflation and slower growth, “the policy response will be key,” she said, as gold “transitions away from moving in-step with risk assets”.
Adding further uncertainty, Trump said he would fire Fed chair Jerome Powell if he did not step down “in time”, adding that a Justice Department probe into the central bank chief would continue. Trump has been pushing aggressively for lower interest rates, and his stance towards Powell underscores growing tension between the White House and the Fed over policy.
Gold has fallen about 8% since the start of the war, with a liquidity squeeze in the early weeks of fighting leading investors to offload holdings and cover losses elsewhere. In a sign that buyers are coming back to the market, bullion-backed exchange-traded funds have added around 25 tonnes so far this month, after cutting around 94 tonnes in March, according to a Bloomberg tally.
Spot gold was up 0.4% to US$4,808 an ounce at 11.36am in London, as silver climbed 0.7% to US$79.55 an ounce. Platinum and palladium also advanced, while the Bloomberg Dollar Spot Index was little changed.
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