Spot Gold extended gains on Wednesday after recent sell-off, supported by a softer US Dollar, as diplomatic efforts between the US and Iran have, to an extent, improved sentiment.
Israeli media stated that Washington was seeking a 1-month ceasefire in order to enable negotiations. At the same time, the New York Times said that the US had sent Iran a 15-point proposal to resolve the confrontation.
In addition, US President Donald Trump delayed planned strikes on Iran’s energy infrastructure, while Iran reportedly offered concessions related to energy flows through the Strait of Hormuz.
As a result, oil prices have eased below $100 per barrel, reducing inflation concerns.
According to Christopher Wong, a strategist at OCBC, “as USD strength eased, safe-haven demand starts to reassert. This reinforces the view that gold didn’t lose its safe-haven appeal. It was briefly crowded out by the USD, and now that pressure is easing.”
A softer dollar makes dollar-priced Gold more appealing to international investors holding other currencies.
“Near-term, gold is likely to stay sensitive to Federal Reserve policy path expectations, USD and geopolitical developments, but the rebound suggests dips may continue to find support unless real yields move meaningfully higher,” Wong was quoted as saying by Reuters.
Spot Gold was last up 1.95% on the day to trade at $4,561.71 per troy ounce.
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