(May 12): Gold was little changed, shrugging off the deadlock in the Middle East conflict, as stock markets rose and investors added back positions.
Bullion was trading near US$4,730 an ounce after US President Donald Trump called Iran’s response to last week’s US peace proposal “a piece of garbage” and said the fragile ceasefire in the Strait of Hormuz was on “massive life support", providing no end in sight to the conflict.
Stock markets advanced as traders focused on AI-driven optimism while shrugging off the lack of progress in Hormuz. Gold buying interest has emerged despite the inflationary risks from higher energy prices as its traditional role as a safe haven in times of stress resurfaces.
The “correlation between oil and gold has naturally weakened as the market response evolves and fatigues”, said Nicky Shiels, head of research and metals strategy at trader and refiner MKS PAMP. Stock market rallies are supportive as gold “hasn’t been able to fully capitalise on the AI-induced re-rating in US stocks throughout May", adding that the precious metal is now a “loose risk asset and loose safe haven", she said.
Silver was little changed after surging more than 7% on Monday, following a report on the liquidity crisis of a state-owned oil firm in Peru. The country is one of the biggest silver producers.
See also: Gold falls as Trump rejection of Iran offer fans inflation fears
Trump’s comments on the Iran ceasefire deal come ahead of a key US inflation report on Tuesday. Economists expect a sharp rise in the consumer price index after the Iran war triggered price surges that are rippling through manufacturing and farming.
The president has mounted a new push to tackle affordability on the eve of the report, taking aim at surging beef and gasoline prices that may threaten his party’s hold on Congress.
Spot gold slipped 0.1% to US$4,728.29 an ounce as of 9.46am in Singapore. Silver was down 0.1% to US$85.94. Platinum and palladium fell. The Bloomberg Dollar Spot Index was 0.2% higher.
Uploaded by Arion Yeow
