Gold prices rose for the third consecutive session on Thursday, supported by a weakening USD as expectations of an agreement between the US and Iran help ease concerns about inflation as well as the possibility of interest rates remaining high for a long time.
As of 3:23 PM Vietnam time, spot gold prices increased by 1.12% to 4,735.85 USD/ounce, after increasing by about 3% in Wednesday's session and hitting the highest level since April 27. US gold futures for June delivery increased by 1.2% to 4,748.50 USD/ounce.
US President Donald Trump predicts the war with Iran will end soon as Tehran is considering a peace proposal from the US. According to sources, this proposal will officially end the conflict but has not yet resolved Washington's key demands, including Iran's suspension of its nuclear program and reopening the Strait of Hormuz.
Gold prices are rising today thanks to the weakening USD and falling oil prices, as the current ceasefire is still maintained although fragile, while expectations are increasing for a more sustainable long-term agreement between Washington and Tehran," said Tim Waterer – Head of Market Analysis at KCM Trade.
The USD fluctuated near the three-month low set in the previous session, making gold cheaper for those holding other currencies.
The benchmark 10-year US Treasury bond yield has fallen by about 0.6% since the beginning of the week, thereby reducing the opportunity cost of holding gold.
Oil prices fell below $100/barrel as the market became more optimistic about the possibility of the war in the Middle East ending soon.
However, gold prices have fallen more than 10% since the war broke out at the end of February due to pressure from rising oil prices. Strong crude oil prices may boost inflation, increasing the possibility of interest rates remaining high. Although gold is often seen as an inflation hedging tool, high interest rates are detrimental to this non-performing asset.
Currently, investors are waiting for the US monthly jobs report to be released on Friday to assess whether the US economy is strong enough to make the Fed continue to maintain monetary policy.
On other precious metals markets, spot silver prices rose 2.6% to 79.31 USD/ounce, platinum rose 1% to 2,081.68 USD/ounce, while palladium rose 1.3% to 1,556.79 USD/ounce.
