Gold prices rose more than 1% in the first trading session of the week as expectations of a breakthrough in peace talks between the US and Iran weakened the USD and oil prices fell sharply, thereby helping to cool down inflation concerns.
As of 3:15 PM Vietnam time, spot gold prices increased by 0.4% to 4,561.16 USD/ounce. US gold futures for June delivery also increased by 0.8% to 4,559.80 USD/ounce.
Mr. Tim Waterer – Head of Market Analysis at KCM Trade believes that recent statements by US President Donald Trump are increasing market expectations about the possibility of reaching an agreement with Iran, which could lead to the reopening of the Strait of Hormuz.
According to him, this prospect has put downward pressure on oil prices and indirectly supported gold as inflation prospects become less tense.
Meanwhile, US Secretary of State Marco Rubio said that the US will either reach a positive agreement with Iran, or take other measures to deal with this country.
The USD is currently fluctuating around its lowest level in a week, making gold - an asset valued in the greenback - more attractive to investors holding other currencies.
Oil prices, a factor that has a major impact on inflation expectations, have also fallen to a two-week low.
Analysts believe that the diễn biến of oil prices is still a key factor for the prospects of inflation and global monetary policy.
High oil prices often increase inflationary pressure and force central banks to maintain high interest rates for longer. Although gold is often seen as a hedge against inflation, high interest rates put pressure on precious metals because gold does not generate profits.
The market is also closely monitoring policy signals from Mr. Kevin Warsh after he officially sworn in as Chairman of the US Federal Reserve (Fed) last Friday.
Mr. Warsh took over the Fed in the context that the US economy is under great pressure from rising energy prices due to the Iranian conflict, causing inflation to increase and consumer confidence to weaken.
On other precious metals markets, spot silver prices increased sharply by 3.1% to 77.79 USD/ounce. Platinum prices rose 2.3% to $1,966.59/ounce, while palladium rose 2.7% to $1,384.70/ounce.
