Spot Gold extended gains on Thursday, as focus sets on US-Iran nuclear talks in Geneva for indications whether tensions in the Middle East may ease or escalate.
Meanwhile, the US Dollar has softened amid uncertainty over US trade policy, creating a supportive backdrop for Gold. A softer dollar makes dollar-priced Gold more appealing to international investors holding other currencies.
The United States seeks to persuade Tehran to abandon its nuclear infrastructure plans. US President Donald Trump has warned that military action may follow in case Iran refuses to reach a deal.
On the trade front, US Trade Representative Jamieson Greer suggested yesterday that Washington could raise tariffs on some countries to 15% or higher from the recently set 10%. He, however, did not specify which partners might face higher duties.
Investors are concerned some countries may renegotiate trade deals following the Supreme Court ruling against Trump’s tariff policies.
“Price action reflects a re-pricing of fresh policy (tariff) uncertainty, geopolitical concerns, and a subdued dollar,” Christopher Wong, strategist at OCBC, was quoted as saying by Reuters.
“Two-way consolidation is still likely in the interim as markets digest geopolitical (news), dollar moves, tariff surprises, and Fed policy uncertainty.”
Investors are currently expecting the first rate cut, out of potential three, by the Fed for this year to occur as early as June.
Gold was last up 0.33% on the day to trade at $5,180.64 per troy ounce.
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