Gold Prices Surge Amid Easing US-Iran Tensions and Reduced Inflation Concerns

Gold Prices Steady After Biggest Daily Advance Since Late March

Gold prices steadied on Thursday, following their largest daily gain since late March, as hopes of a US-Iran deal to end the war sent oil prices plummeting and eased inflation concerns. Bullion traded above $4,690 an ounce, after jumping 3% on Wednesday. The sharp decline in energy prices weighed on bond yields, while the dollar fell to pre-war levels, providing a boost to gold, which is priced in the US currency and doesn't offer interest.

US-Iran Conflict and Global Pressure

Iran is evaluating a fresh proposal from the US to end the near 10-week conflict, according to a person familiar with the matter. China has added its voice to global pressure to wrap up the war. The US has stated that it will end its military campaign and lift its blockade of the Strait of Hormuz "assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption," President Donald Trump posted on social media.

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Markets React to Potential Peace Deal

Headlines of a potential peace deal have put the precious metals and base metal complex on the front foot this morning, according to TD Securities strategists. However, they caution that these headlines remain extremely fragile to reversal, as US and Iranian demands seemingly remain unchanged compared to prior proposals. The strategists note that while markets are pricing in hope, the US Federal Reserve Bank of Chicago President Austan Goolsbee struck a note of caution, noting that inflation has not only failed to continue cooling to the US central bank's 2% target, but has moved up since the start of the war.

Precious Metal Prices

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Spot gold was steady at $4,692.98 an ounce at 7:41 a.m. in Singapore. Silver rose 0.1% to $77.44 after jumping 6.2% on Wednesday. Platinum was flat, while palladium edged higher. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed after falling 0.6% in the previous session.