(March 26): Gold steadied after a two-day recovery, as traders weighed conflicting statements from the US and Iran about negotiations to end the war in the Middle East.
Bullion was near US$4,510 an ounce in early trading, having gained more than 2% over the previous two sessions. The White House insisted that talks with Iran are taking place and has compiled a 15-point peace proposal, while Tehran publicly rejected US overtures to end the conflict and issued conditions of its own. Even as it pursues diplomacy, the US has ordered thousands of troops to the region, fueling fears of a risky ground invasion.
Since the war began nearly a month ago, gold has fallen nearly 15%, moving largely in tandem with stocks and in an inverse relationship with oil. Spiking energy prices have raised the risk of inflation and led investors to bet that central banks will keep interest rates unchanged, or hike them. That’s a headwind for non-yielding bullion.
The prospect of a rate hike by the Federal Reserve may be moderated by the risk of an economic downturn in the US caused by a protracted war. Wall Street is cutting its forecasts for the American economy this year, boosting its projections for inflation and unemployment and nudging up the odds of a recession.
Spot gold was little changed at US$4,505.86 an ounce at 7:05 a.m. Singapore time. Silver slid 1% to US$70.51. Platinum and palladium edged higher. The Bloomberg Dollar Spot Index was flat after ending the previous session up 0.2%.
Uploaded by Jason Ng
