Gold Prices Remain Steady Amid Ongoing Tensions Over Fragile Iran Ceasefire

Gold Steadies Amid War Uncertainty

Gold prices steadied on Wednesday after a two-day gain as traders weighed the prospect for a diplomatic resolution to the Iran war. The war, now in its sixth week, has driven a spike in energy prices and raised inflationary risks, making it more likely that central banks will delay cutting interest rates or even hike them.

The White House announced plans to hold direct talks with Iran, while Tehran cast Israeli attacks in Lebanon as a violation of a day-old ceasefire and continued strikes on Gulf states. The Strait of Hormuz remained largely blocked despite Iran's assurances of safe passage. Oil rebounded after its biggest one-day drop since April 2020, while stocks gained and a gauge of the dollar fell, supporting gold that's priced in the US currency.

Bullion has traded largely in tandem with stocks since the war began nearly six weeks ago, with its haven appeal dimmed by some investors' need to cover losses elsewhere. However, a protracted war could also lead to a slowdown in growth, hurting the labor market and warranting lower rates. The Federal Open Market Committee's minutes from its March 17-18 meeting showed policymakers wrestling with these starkly different scenarios for the US economy.

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

Key Statistics

Spot gold edged 0.1% lower to $4,715.10 an ounce at 6:13 a.m. Singapore time, while silver slipped 0.3% to $73.83.