Spot gold traded around $4,840 an ounce in early Asian hours on Wednesday, buoyed by hopes for renewed US-Iran peace talks that weakened the dollar and tempered inflation worries from energy risks. The metal held most of a 2.1 percent advance from the prior session amid reports Washington and Tehran eye a second round of negotiations. US President Donald Trump indicated talks could resume within days.
Market Snapshot
Bullion trading stood at $4,838.53 per ounce, down 0.1 percent on the day as of 7:13 a.m. Singapore time. The Bloomberg Dollar Spot Index held steady after a 0.3 percent drop in the previous session, making gold cheaper for overseas buyers. US gold futures settled 1.7 percent higher at $4,850.10 overnight.
Talks Momentum
US and Iranian officials seek to arrange fresh discussions before a ceasefire expires, sources said. Trump pressed ahead with a naval blockade on Iranian ports to pressure Tehran, but optimism for a deal lifted risk sentiment. A two-week truce has steadied oil flows, reducing fears of supply shocks.
Dollar Pressure
The dollar index (DXY) eased amid the diplomatic thaw, supporting non-yielding assets like gold. Traders now see a 33 percent chance of a US rate cut this year, down from bets for two prior to recent developments. “The weaker dollar makes bullion more affordable to holders of other currencies,” one trader noted.
Correlated Moves
Oil prices steadied after declines, with Brent (LCOc1) and WTI easing on reduced Middle East tensions. US equities surged in the prior session, while 10-year Treasury yields dipped 2 basis points to 4.25 percent. Silver fell 0.2 percent to $79.42 an ounce after a 5 percent jump, with platinum and palladium marginally lower.
Macro Implications
Easing energy risks curbs inflation pressures that had prompted bets on prolonged high rates. A successful deal could stabilize Gulf oil infrastructure hit by strikes, aiding global growth outlooks. Yet persistent tensions in the Strait of Hormuz keep bullion supported as a hedge.
Traders monitor progress on US-Iran talks in Islamabad, upcoming US producer price data, and any escalation in the naval standoff.
