International gold prices have been trading in a tight range, hovering near $4,000 an ounce, as investors monitor US-Iran peace talks and assess the Federal Reserve's future interest rate policy. Spot gold was around $4,006.73 an ounce in Singapore as of 7:55 a.m., stabilizing after a roughly 2% drop over the two previous sessions. Other precious metals also saw minor movements, with silver down 0.2%, platinum little changed, and palladium edging lower. The Bloomberg Dollar Spot Index, meanwhile, rose 0.1%.
The prospect of additional Fed rate hikes is weighing on gold, which has fallen about 24% since the Middle East conflict began in late February and slipped below its 200-day moving average. This decline is also influenced by the stabilization of oil prices after an earlier wartime surge. Despite inflation concerns, the US economy has demonstrated resilience, with May job openings remaining largely unchanged and the labor market showing stability. This economic strength provides the Fed with room to maintain current interest rates while closely monitoring inflation.
However, uncertainty surrounding US-Iran talks is a key factor. While envoys have traveled for negotiations, Qatar, mediating the discussions, indicated no direct meeting is scheduled, dampening hopes for a major breakthrough. Iran has reiterated its control over vessel traffic through the Strait of Hormuz, a critical shipping route for approximately 20% of global crude oil and liquefied natural gas flows. Analysts like Hebe Chen from Vantage Markets note that while easing geopolitical tensions could help cool inflation, the market is prioritizing renewed US rate-hike expectations and a stronger US dollar, both of which increase the opportunity cost of holding non-yielding gold.
