Gold prices are almost flat as investors assess the latest efforts between the US and Iran to find a negotiated solution to the two-month conflict, which has disrupted energy supplies and increased inflation risks.
This precious metal traded around 4,695 USD/ounce, after falling 0.6% in Monday's session. US President Donald Trump has convened a meeting with national security officials to discuss the latest peace proposal from Iran, but still maintains "red lines" in any agreement to end the conflict, according to White House spokeswoman Karoline Leavitt.
These statements were made after information that Tehran proposed a temporary agreement, under which Iran would reopen the Strait of Hormuz in exchange for Washington ending the blockade of ships moving in and out of its ports. The current confrontation has caused the traffic flow through this strategic route to be almost zero, disrupting the supply of crude oil, natural gas and energy products. Iran's proposal also includes postponing more complex negotiations related to the nuclear program.
Mr. Marc Loeffert, a trader at Heraeus Precious Metals, said that the indefinite extension of the ceasefire while the Strait of Hormuz is still blockaded "persistents market uncertainty". He believes that in the long term, the combination of sluggish economic growth and rising inflation could lay the foundation for the continued upward trend of gold.
This week, investors will closely monitor the interest rate decisions of the US Federal Reserve (Fed), the European Central Bank (ECB) and central banks in Japan, the UK and Canada. The energy supply shock due to the 8-week conflict has increased inflation risks, thereby raising the possibility that central banks will maintain high interest rates for a long time or even increase them - a disadvantage to gold, which is a non-performing asset. Since the conflict broke out at the end of February, gold prices have fallen by about 11%.
At 09:16 am Vietnam time, spot gold prices slightly decreased by 0.47% to 4,678.26 USD/ounce. Silver prices increased by 0.7% to 76.03 USD/ounce, while platinum and palladium also recorded increases. The Bloomberg USD index – a measure of the strength of the greenback – fell slightly after falling 0.1% in the previous session.
