Gold Price Remains Steady as Market Weighs Potential Fallout from US-Iran Diplomatic Talks

Gold Prices Remain Volatile as US-Iran Conflict Continues

Gold prices held a loss on Thursday as fresh clashes in the Persian Gulf weighed on hopes for a US-Iran peace deal, reinforcing concerns that inflation could keep interest rates higher for longer.

In early trading, gold was near $4,510 an ounce, following a 1.4% decline on Tuesday. The ongoing hostilities between US and Iranian forces near the Strait of Hormuz come despite both sides touting progress toward an interim peace deal. US Secretary of State Marco Rubio stated that any pact would likely take a few days to finalize.

Despite the impasse, confidence is growing that the three-month conflict will remain contained, with traders seizing on signs of diplomatic progress even as attacks continued. This risk-on mood has lifted equities to fresh highs.

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The situation remains fragile, with inflation fears continuing to loom over precious metals. Bullion has slumped around 15% since the conflict erupted in late February, with traders ramping up rate-hike bets as the war sent energy prices soaring and fanned inflation concerns. Higher borrowing costs weigh heavily on gold, which does not pay interest.

Spot gold edged up 0.1% to $4,514.48 an ounce as of 7:37 a.m. in Singapore. Silver gained 0.5% to $77.25, while platinum and palladium also rose. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed after ending the previous session 0.1% higher.