Gold Prices Climb on Optimism Surrounding Iran Nuclear Talks, Fed Policy Outlook to Come Into Focus

Global Markets React to US-Iran Talks and Fed Developments

Gold prices have advanced, driven by optimism over potential US-Iran talks and the Federal Reserve's interest rate path. Traders are assessing the implications of the Justice Department dropping its probe into Chair Jerome Powell, with bullion rising above $4,700 an ounce as bond yields fell.

The US and Iran are reportedly moving toward talks, with President Donald Trump sending envoys to Pakistan to meet with Iranian officials. Steve Witkoff and Jared Kushner, the president's son-in-law, are set to depart on Saturday for talks. However, Iranian Foreign Minister Abbas Araghchi's trip to Pakistan does not include plans for talks with US officials.

The eight-week war between the US and Iran has raised concerns about inflation, which may lead the Federal Reserve and its peers to keep interest rates elevated for longer or even raise them further. This development is negative for non-yielding bullion, which has traded in a tight range in recent weeks due to shifting headlines from the Middle East conflict.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The State Oil Fund of Azerbaijan, a large sovereign gold buyer, has sold nearly 22 tons of gold in the first quarter, worth over $3 billion at current prices. The rapid price gains have strained the fund's target upper threshold of 35% for gold's share of its portfolio, leading to a need to rebalance its holdings.

Spot gold has risen 0.6% to $4,723.28 an ounce as of 11:57 a.m. in New York, while silver is up 1% at $76.47 an ounce. Platinum and palladium have also gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, has dropped 0.2%.