Key Takeaways
- Gold prices increased by 0.9% to $4,042.69 per ounce.
- Investors are watching diplomatic efforts between the US and Iran.
- Oil prices softened due to reports of mediation efforts.
Gold prices rose on Tuesday as investors weighed diplomatic efforts to ease tensions between the United States and Iran, which could temper oil-driven inflation risks. According to market data, spot gold increased by 0.9% to $4,042.69 per ounce at 03:45 GMT, while US gold futures for August delivery were up 0.8% at $4,047.40.
Ilya Spivak, head of global macro at Tastylive, commented that 'gold is trying to find a base somewhere around this ($4,000) level and is going to try to re-engage the upside from there.' He noted that while the headlines from the Middle East seem to have some degree of impact, they are increasingly only being paid attention to in a passing kind of way.
Oil prices softened on Tuesday as markets weighed reports of mediation efforts between the US and Iran against an exchange of fresh attacks between the two countries. The Houthis made their announcement despite signs that Tehran and Washington want to resume diplomacy to halt a worsening cycle of attacks that has all but wrecked a fragile interim agreement signed last month.
A senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage the interim deal, intended to pave the way to a lasting agreement to end the war. The recent escalation in the conflict drove oil prices to more than a one-month high on Monday.
While the Fed is widely expected to keep interest rates unchanged at next week’s meeting, traders are currently pricing a 64% chance of a rate hike in September, according to the CME FedWatch Tool. High interest rates increase the opportunity cost of holding non-yielding bullion, which has contributed to the rise in gold prices.
Silver also saw gains with spot silver rising by 2.2% to $57.67 per ounce, while platinum was up 0.8% at $1,607.20 and palladium rose 0.8% to $1,263.73. These movements reflect the broader market sentiment influenced by geopolitical events and economic factors.
The ongoing diplomatic efforts between the US and Iran are expected to continue to shape market dynamics in the coming weeks. Analysts suggest that any progress towards a resolution could lead to a decrease in oil prices, which would reduce inflationary pressures and potentially ease pressure on gold as an inflation hedge.
'gold is trying to find a base somewhere around this ($4,000) level and is going to try to re-engage the upside from there.'
Ilya Spivak, Head of global macro at Tastylive
