Gold prices jumped more than 2% as the US-Iran cooling signal pulled USD and oil down.
Gold prices rose sharply in Wednesday's trading session, as US President Donald Trump signaled the possibility of reaching an agreement with Iran, thereby weakening the USD and pulling oil prices down, helping inflationary pressure somewhat cool down.
As of 3:42 PM Vietnam time, spot gold prices increased by 2.56% to $4,674.87/ounce, the highest level since April 28. US gold futures for June delivery also increased by 2.4% to $4,678.20/ounce.
Previously, Donald Trump said that the US would temporarily suspend the escort operation through the Strait of Hormuz, after recording progress in negotiations towards a comprehensive agreement with Iran. US Secretary of State Marco Rubio also confirmed that the "Epic Fury" operation had ended, and emphasized that Washington does not want tensions to escalate again.
According to Mr. Kelvin Wong - senior market analyst at OANDA, gold prices rose amid cooling oil prices due to "geopolitical risk compensation falling", after the US confirmed that a fragile ceasefire with Iran was still maintained, despite clashes earlier this week.
However, Mr. Wong noted that if tensions escalate again, the market may witness profit-taking activity, especially from short-term speculators holding net buying positions for gold.
The diễn biến of the USD also contributes to supporting the precious metal. The weakening greenback makes gold valued in USD more attractive to investors holding other currencies.
However, inflation risk remains a key factor. Oil prices maintaining at a high level could continue to trigger inflationary pressure, thereby increasing the ability of central banks to maintain high interest rates for longer. This is a disadvantage for gold – a non-interest-generating asset.
The market is currently focusing its attention on the US non-farm payroll report released this weekend, to assess the strength of the economy and the ability of the US Federal Reserve (Fed) to maintain its current policy stance.
In a report, ANZ said that factors such as economic growth risks, geopolitical tensions, currency volatility and risk of correction in the stock market will continue to strengthen gold's role as a portfolio diversification asset.
Silver prices increased sharply by 4.2% to 75.84 USD/ounce. Platinum increased by 2.6% to 2,002.75 USD/ounce, while palladium increased by 2.5% to 1,522.93 USD/ounce.
