Gold prices went sideways in Wednesday's trading session as pressure from a strong USD and rising US bond yields were partly offset by expectations of the possibility of cooling down tensions between the US and Iran, thereby helping to reduce inflation concerns.
As of 5:50 PM Vietnam time, spot gold prices slightly decreased by 0.32% to 4,492.64 USD/ounce after at one point falling to the lowest level since March 30 in the early session.
US gold futures contracts for June delivery decreased 0.6% to 4,482.80 USD/ounce.
Mr. Lukman Otunuga - Senior Analyst at FXTM said that any positive signal in US-Iran negotiations, especially if it leads to the reopening of the Strait of Hormuz, could support the gold market by easing inflationary pressure and weakening the USD.
However, he also noted that if negotiations continue to be stalled or tensions escalate again, gold may continue to be under pressure as rising inflation concerns lead to expectations that the US Federal Reserve (Fed) will raise interest rates more sharply.
US President Donald Trump said the war with Iran could end "very quickly", while Vice President JD Vance also mentioned positive progress in exchanges with Tehran towards an agreement to end the conflict.
This information caused oil prices to fall by about 1% in the session, although crude oil still maintained above the 100 USD/barrel mark.
Meanwhile, the USD continues to linger near its six-week high, making gold more expensive for investors holding other currencies.
The yield of 10-year US Treasury bonds also remained around its highest level in more than a year as rising energy prices continued to increase concerns about inflation and strengthen expectations of high interest rates.
Rising yields are often detrimental to gold because this precious metal does not generate profits.
According to a Reuters survey, most economic experts currently believe that the Fed may not cut interest rates this year, while pushing the expectation of policy easing to 2027 as inflationary pressure has not yet cooled down significantly.
According to CME Group's FedWatch tool, the market is currently assessing the probability of the Fed raising interest rates in December at around 40%.
Investors are currently also waiting for the minutes of the Fed meeting in April to be announced on the same day to find more signals about the direction of monetary policy in the coming time.
In a newly released report, ANZ experts said that long-term supporting factors for gold such as geopolitical instability, public debt concerns and the trend of foreign exchange reserve diversification of central banks have not changed.
On other precious metals markets, spot silver prices rose 1.8% to $75.13/ounce. Platinum prices rose 0.3% to $1,927.20/ounce, while palladium rose 1.5% to $1,373.95/ounce.
