Middle East Talks Keep Gold Prices Tied Down

Gold prices held steady as traders closely monitored negotiations in the Middle East to assess their impact on interest rates. The US and Iran signaled that talks were ongoing to restore shipping through the Strait of Hormuz, raising hopes for a pickup in supply that would ease energy-driven inflation.

The US Federal Reserve's decision to leave interest rates unchanged last week was seen as a key factor in gold's stability. However, analysts at Citi Research predict that gold prices could stagnate or decline over the next month before rallying to $4,500 an ounce in the fourth quarter.

This forecast is based on the assumption that the US-Iran conflict will end and Hormuz flows normalize, leading to lower real interest rates and a weaker dollar. The analysts also noted that gold is down by more than a fifth since the conflict began five months ago.