Gold Set to End Three-Day Losing Streak on US-Iran Optimism
Gold prices moved higher on Monday and were on track to end a three-session losing streak.
Progress in US-Iran negotiations and a sharp decline in crude oil prices supported the precious metal. These factors outweighed concerns about the Federal Reserve’s hawkish policy stance.
Spot gold rose 0.55% to $4,183.08 an ounce by 9:33 a.m. ET, or 1:33 p.m. GMT.
Meanwhile, US gold futures fell nearly 1% to $4,204.84 an ounce.
Gold Recovers After Weekly Decline
Bullion fell approximately 1.4% last week and entered Monday’s session after three consecutive daily losses.
However, renewed diplomatic progress between the United States and Iran improved market sentiment.
The talks reduced concerns about a prolonged disruption to global energy supplies. As a result, crude oil prices declined and provided support for gold.
US-Iran Talks Show Major Progress
Iranian Foreign Minister Abbas Araghchi said negotiators had achieved significant progress during talks in Switzerland.
Qatar and Pakistan, which are mediating the negotiations, also reported that both sides had agreed on a roadmap toward a broader settlement.
Technical discussions are expected to continue throughout the week.
The diplomatic developments encouraged hopes that the conflict could ease without causing further disruption to global oil supplies.
Lower Oil Prices Ease Inflation Concerns
Brent crude fell around 3%, reversing earlier gains after signs of progress emerged from the US-Iran negotiations.
Oil prices remained sensitive to tensions surrounding the Strait of Hormuz. Nevertheless, the diplomatic breakthrough reduced fears of an immediate supply crisis.
Lower energy prices could also ease inflationary pressure.
This may reduce the likelihood that rising fuel costs will force the Federal Reserve to pursue a more aggressive interest-rate policy.
Federal Reserve Outlook Limits Gold Gains
Despite Monday’s recovery, expectations for elevated US interest rates prevented gold from rising more sharply.
Investors continued to assess the Federal Reserve’s latest policy meeting. Officials maintained a hawkish tone and left the possibility of further rate increases open.
Persistent inflation remains one of the central bank’s main concerns.
Higher interest rates generally create pressure on gold because the precious metal does not offer interest or dividend income.
Geopolitical Risks Continue to Support Bullion
ING analysts said geopolitical uncertainty should continue providing underlying support for gold.
However, they warned that a higher-for-longer US interest-rate environment could restrict the metal’s near-term upside.
The US Dollar Index also remained close to the 13-month high reached during the previous week.
A stronger dollar can make gold more expensive for buyers using other currencies, which may reduce international demand.
Investors Await US PCE Inflation Data
Markets are now preparing for the latest US Personal Consumption Expenditures price index.
The PCE index is the Federal Reserve’s preferred measure of inflation. Therefore, the upcoming report could provide important clues about the direction of monetary policy.
A softer reading may strengthen expectations that interest rates have peaked. In contrast, stronger inflation could increase speculation about additional tightening.
Silver and Platinum Prices Rise
Other precious metals also advanced on Monday.
Silver climbed 2.5% to $66.55 an ounce, while platinum gained 2% to $1,699.84 an ounce.
Copper prices also moved higher. Benchmark London Metal Exchange copper futures rose 0.9% to $13,719.70 a metric ton.
Meanwhile, US copper futures increased 0.6% to $6.37 per pound.
