Gold Prices Hold Steady Amid US-Iran Tensions and Bond Market Volatility

Gold prices stabilized on Wednesday after a sell-off in US bonds eased, but concerns over the Strait of Hormuz's control and potential interest rate hikes kept gains limited.

The precious metal rose as much as 0.6 per cent to trade above $4,360 an ounce, reversing Tuesday's losses when it fell almost 2 per cent. Treasuries steadied after plummeting on Tuesday, with yields on 30-year notes reaching their highest level in nearly two decades.

Gold has recovered in recent weeks, trading around $4,400 an ounce, due to renewed investor demand and central bank buying, particularly from China. A fund manager survey by Bank of America showed that the share who said gold was undervalued hit a high not seen since March 2023.

However, the dim prospects for a peace deal between the US and Iran may keep gains in check. US President Donald Trump stated there were no ongoing talks with Tehran, leaving control of the Strait of Hormuz uncertain. This has buoyed oil prices, potentially increasing energy-led inflation and putting pressure on the US Federal Reserve to raise interest rates.