Spot Gold bounced off a one-week low on Tuesday, as the US Dollar softened and oil prices decreased.
There is a bit of market optimism that diplomatic efforts between the United States and Iran could continue, even after peace talks over the weekend failed to deliver a resolution.
US Vice President JD Vance, speaking in an interview on Fox News, adopted a guardedly positive stance on discussions with Iran, indicating that meaningful headway has been made despite the absence of a final deal. Vance also noted the “framework for a comprehensive agreement is achievable if Iran is willing to take the next step.”
Oil prices dropped below $100 per barrel, as signs of potential dialogue between the United States and Iran to end their confrontation eased supply risk concerns.
Meanwhile, the US Dollar was holding near a more than 1-month low, making dollar-priced Gold more appealing to international investors holding other currencies.
Still, persistent instability in the Strait of Hormuz is limiting more aggressive selling of the US Dollar and capping Gold’s upside.
US President Donald Trump said yesterday that a US Navy blockade of the key shipping channel had “officially started” and pledged to destroy any nearby Iranian warships. Iran responded with threats against all ports in the Persian Gulf and the Gulf of Oman.
Markets are now pricing in a 31% chance of a 25 basis point Fed rate cut by year-end, compared to about 13% last week.
Spot Gold was last up 0.74% on the day to trade at $4,775.59 per troy ounce.
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