Spot Gold rebounded on Wednesday, following two days of losses, as the US extended a ceasefire with Iran, which eased concerns of an inflation surge, pushing oil prices lower by over 1%.
US President Donald Trump stated he would indefinitely extend the ceasefire with Iran so that further peace talks could take place.
Yet, it was not immediately certain if Iran or Israel would agree to the extension.
“With this ceasefire extension, the markets perceive a de-escalation in the crisis,” Marex analyst Edward Meir was quoted as saying by Reuters.
“If the ceasefire ends and hostilities resume, we will see the dollar strengthen, oil and interest rates go up and that should pressure (gold) prices.”
High interest rates tend to increase the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last up 0.98% on the day to trade at $4,766.98 per troy ounce.
“While we note that the recent tick higher in prices has been fragile and is at risk of a short-term correction, we continue to expect (precious metals) prices to recover and gold in particular to retest record highs,” Standard Chartered noted.
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