Spot Gold snapped a two-day streak of gains on Thursday, as market players were looking for more vivid signs of progress in Middle East de-escalation efforts.
US President Donald Trump said Iran was desperate to reach an agreement to end the almost 1-month long war. Iran’s foreign minister said that a US proposal was being reviewed, but yet, Iran had no intention of talking about winding down the conflict.
“In the next 24 to 48 hours, (gold prices) will just be about reacting to headlines about negotiations,” Kyle Rodda, senior financial market analyst at Capital.com, was quoted as saying by Reuters.
“The really big moves will happen probably at the start of next week when it becomes clearer whether the U.S. launches a ground invasion in Iran over the weekend.”
The US has increased its military presence in the region, adding to fears of further escalation and underpinning the US Dollar’s safe-haven appeal.
At the same time, disruptions to Iran’s energy infrastructure persisted, while the Strait of Hormuz faced effective closure risks. Crude prices remained elevated, fueling inflation concerns and reinforcing the case for tighter monetary policy.
Markets now expect the Federal Reserve will likely hold rates higher for longer. Higher interest rates tend to increase the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last down 1.12% on the day to trade at $4,456.27 per troy ounce.
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