Gold prices narrowed their gains as traders assessed mixed signals related to the possibility of the US and Iran reaching a ceasefire agreement, increasing uncertainty about interest rate prospects - a factor that is strongly dominating the developments of precious metals in recent times.
Gold's upward momentum cooled down after jumping to 2.2% at one point. This development occurred after US President Donald Trump said on social media that he would make a "final decision" on a preliminary agreement to extend the ceasefire with Iran. However, later, the New York Times reported that Mr. Trump left the two-hour meeting without making any decision.
Bond yields and the USD narrowed their decline, putting pressure on gold prices because this precious metal does not yield interest and is valued in greenbacks.
The White House continuously sends inconsistent messages about the prospect of reaching an agreement with Iran, showing Mr. Trump's difficulties in finding a way out of the conflict that has lasted for the past three months.
Since plunging into the early stages of the war between Iran and the US, gold prices have mainly fluctuated in a narrow range as investors continuously consider opposing signals about the progress towards a ceasefire. Currently, the price of precious metals has decreased by about 14% compared to the end of February.
Mr. Andy Matthews – Global Director in charge of precious metal distribution at UBS Group AG commented: "Periodally, periods of rising yields or volatile bond markets are accompanied by a short-term weakening of gold prices.
According to Mr. Matthews, volatility in the precious metal market may not be clearly shown in spot prices but appears in the market's operating mechanism itself, such as price differences between regions or between different delivery terms.
He believes that the increasingly fragmented global context, with the trend of stockpiling by region and localized inventory supply, is making factors such as the availability of goods, storage location and delivery time increasingly important in price formation.
Spot gold price is at 4,512.87 USD/ounce. Silver price is almost flat, while platinum price is up and palladium is down.
