Gold Prices Remain Unchanged Amid Ongoing US-Iran Conflict Resolution Uncertainty

Global Markets Remain Cautious Amid Ongoing Middle East Tensions

Gold prices have stabilized as renewed clashes in the Middle East cast doubt over negotiations between the US and Iran to end the war that has disrupted energy flows and heightened concerns about inflation.

The price of gold hovered around $4,490 an ounce, having briefly fallen by as much as 0.6% in early trading before recovering losses. The US government has expressed optimism about the prospects of reaching an interim peace deal with Iran, contradicting reports in Iranian state media that discussions with Washington had been suspended due to fighting in Lebanon. A new round of talks between Israel and Lebanon is scheduled for Wednesday.

Meanwhile, there have been fresh attacks across the region, with Iran firing ballistic missiles at Kuwait and Bahrain, though these missiles appear to have broken apart en route or been intercepted. US forces have conducted strikes on the Islamic Republic's Qeshm Island, according to a statement from US Central Command on X.

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The price of oil has advanced for a third consecutive day, with Brent crude climbing towards $97 a barrel. This upward trend in oil prices is largely in line with the inverse relationship between gold and oil that has been observed since the conflict began in late February. Gold prices have fallen sharply in the early days of the conflict and remain approximately 15% below their immediate pre-war level, though they have traded in a narrow range over the past few weeks.

The prolonged disruption to energy flows through the Strait of Hormuz has raised concerns about global inflation, making it more likely that central banks will maintain interest rates or even raise them. This development is a headwind for precious metals, which do not pay interest.

US economic data released on Tuesday revealed that job openings jumped in April to their highest level in almost two years, while layoffs fell. This information has reinforced bets that the Federal Reserve will keep interest rates higher for longer. Fed Bank of Cleveland President Beth Hammack has stated that it is reasonable to maintain current borrowing costs, given the uncertainties surrounding the economic outlook. However, officials may need to act soon to address elevated inflation.

As of 9:02 a.m. in Singapore, the price of spot gold edged down by 0.3% to $4,475.30 an ounce. Silver prices were 0.6% lower at $74.60 an ounce, while platinum and palladium prices were down marginally. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed.

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