Gold prices rose again as investors assessed new developments related to peace talks between the US and Iran and their impact on the reopening of the Strait of Hormuz.
The US and Iran have not yet found common ground on how to end the conflict as well as restore operations in the Strait of Hormuz - the world's important energy shipping route. US President Donald Trump said that Iran's latest response to Washington's peace proposal is "infeasible".
In the trading session on Monday, gold prices at one point increased by 0.7% after previously falling 1.4%. Oil prices also rose as transportation through the Strait of Hormuz was almost stalled, raising concerns about inflationary pressure.
Meanwhile, the USD and US bond yields narrowed their gains – factors that support gold because this precious metal is valued in USD and is not profitable.
Notably, silver prices jumped sharply by more than 6% in the session.
Ms. Priyanka Sachdeva - Analyst at Phillip Nova PTE Ltd. said that Mr. Trump's rejection of the latest proposal from Iran shows that the US's top priority is still to restrain Tehran's nuclear ambitions.
According to her, this means that the risk of prolonged tensions in the Middle East or negotiations falling into a state of stagnation still exists.
Gold prices currently continue to reflect a sideways accumulation state as the market is dominated by geopolitical concerns and rising inflationary pressure," Ms. Sachdeva said.
She also said that the combination of the two factors above may cause gold prices not to form a clear trend even though fluctuations in the global financial market are still high.
In India, Prime Minister Narendra Modi on Sunday called on people to limit gold purchases for at least one year to preserve foreign exchange reserves for fuel imports. India is currently the world's second largest gold importer and gold accounts for a large proportion of the country's imports, second only to oil.
Meanwhile, the term of Chairman of the US Federal Reserve (Fed) Jerome Powell is expected to end this week. Mr. Powell is known for his stance on protecting the Fed's independence from political impacts. Concerns related to the Fed's independence were once one of the factors supporting the upward momentum of gold prices at the beginning of the year.
As of 10:08 Vietnam time, spot gold price increased by 0.9% to 4.727.96 USD/ounce. Silver price increased slightly by 0.16% to 86.22 USD/ounce, while platinum and palladium also simultaneously went up. The Bloomberg Dollar Spot Index almost went sideways.
