Gold steadies as US, Iran flag early progress in peace talks

SINGAPORE: Gold steadied after the US and Iran flagged early progress in negotiations to end the war that’s upended global markets and stoked inflation.

Bullion was near US$4,190 an ounce, having gained nearly 1% in the previous session to snap a three-day decline.

US vice-president JD Vance said talks over the weekend with Iran were “very, very good” and Iranian officials also cited headway, although plenty of obstacles remain as the two sides look to fulfill a memorandum of understanding signed last week.

Among other things, a communication line between Tehran and Washington was formed with the aim of securing safe passage for vessels through the Strait of Hormuz.

The US also issued a 60-day license allowing Iran to sell some oil on the international market. Crude prices edged higher on Tuesday after a decline.

“The gold and silver markets remain in thrall to external factors and are still reluctant to move either way,” Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc, wrote in a note.

“The technical positions are not good for either metal, although some flows are improving,” O’Connell said.

Gold is down about a fifth since the war began at the end of February, while silver has fallen more than 30%.

The near-closure of Hormuz has choked oil and natural gas flows and pushed up energy prices, raising the likelihood that central banks will hike borrowing costs to combat inflation – a headwind for precious metals, which don’t pay interest.

The hawkish tone adopted last week by new Federal Reserve (Fed) chair Kevin Warsh jolted investors and offset the positive impacts from the interim US-Iran deal.

The US dollar has gained more than 1% since the last Fed meeting – another drag on gold that’s priced in the US currency.

The greenback remains “the primary driver in the current environment,” said Ahmad Assiri, an analyst at Pepperstone Group Ltd.

Spot gold was little changed at US$4,188.91 an ounce at 8am in Singapore.

Silver slipped 0.2% to US$64.94 an ounce. Platinum and palladium edged lower, while the Bloomberg Dollar Spot Index was also down marginally.