Gold Price Wavers as Fed Outlook and Iran Talks Weigh on Markets
Gold prices wavered as traders weighed the Federal Reserve's interest-rate path after tensions in the Middle East eased, reducing energy-driven inflation concerns.
The metal traded around $4,050 an ounce, marking its first monthly gain since February with a 1% increase. President Donald Trump announced new Iran talks would begin on Monday afternoon, following his decision to call off a planned attack on Iran due to pleas from US allies in the Middle East.
US crude prices slid to settle near $80 a barrel, while Treasury yields fell. Goldman Sachs' Samantha Dart noted that 'the environment is a little bit better in terms of support for gold right now after the Fed meeting,' citing fears of higher interest rates increasing the opportunity cost of holding gold and prompting investors to reduce holdings.
Gold has declined by more than a fifth since the US-Iran war began over five months ago, with high energy prices stoking inflationary pressures and raising the likelihood that interest rates will stay higher for longer, a headwind for precious metals, which don't pay interest. Market strategist Ahmad Assiri from Pepperstone Group Ltd. noted gold received 'a second relief card' after Trump delayed strikes on Iran over the weekend and following the soft hawkish tone from the Fed last week.