Gold prices remained stable after recording the strongest increase since the end of March, as traders assessed optimism surrounding the possibility of the US and Iran reaching an agreement to end the war, which caused oil prices to plummet and eased inflation concerns.
Gold traded around the threshold of 4,700 USD/ounce after soaring 3% in Wednesday's session. The fall in energy prices dragged bond yields down, while the USD fell to levels before the outbreak of war, creating support for gold – an asset valued in USD and non-interest-generating.
According to a source familiar with the issue, Iran is considering a new proposal from the US to end the nearly 10-week conflict, in the context that China is also increasing international pressure to promote the end of the war.
US President Donald Trump has repeatedly signaled throughout the conflict that an agreement is very close, although no real breakthrough has yet taken place. He wrote on social media on Wednesday that the US will end the military campaign and lift the blockade in the Strait of Hormuz "if Iran agrees with what has been agreed upon, even if it may be a big assumption".
Titles related to the possibility of reaching a peace agreement are supporting precious metals and basic metals this morning" - the TD Securities strategist group led by Ryan McKay said in a report.
“However, we warn that this information is still very fragile and can reverse quickly, because the requests from the US and Iran do not seem to have changed compared to previous proposals.
Although the market is betting on positive prospects, Chairman of the Federal Reserve Chicago (Fed Chicago) Austan Goolsbee and Chairman of the Federal Reserve Bank (Fed) Alberto G. Musalem still sent cautious signals, emphasizing that inflation is still higher than the target of 2%.
Gold prices have fallen by about 11% since the conflict broke out at the end of February, when the blockade of the Ormuz Strait and the energy price shock followed raised concerns about rising inflation and interest rates could remain at higher levels longer than expected.
As of 09:41 am Vietnam time, spot gold prices increased to 4,701.68 USD/ounce, up 0.52% compared to the afternoon trading session on May 6. At 15:42, gold prices only hovered around 4.674.87 USD. Silver prices also fluctuated little around 77.27 USD/ounce after rising sharply by 6.2% in the previous session. Meanwhile, platinum and palladium prices simultaneously went up. The Bloomberg Dollar Spot Index – a measure of the strength of the USD – remained almost unchanged after falling 0.6% in the previous session.
