Gold prices experienced a boost following signals from US President Donald Trump that the conflict in the Middle East may be approaching its end. This development also triggered a decline in oil prices. Bullion prices rose as much as 0.9 per cent, reaching over $US5180 an ounce, thereby recovering from losses incurred in the previous trading session. Trump indicated that the conflict would be resolved “very soon,” while a measure of the US dollar weakened by up to 0.1 per cent, continuing its downward trend from Monday. Crude oil prices sharply decreased by more than 10 per cent amidst highly volatile trading conditions.
Any indication that the White House is considering ending the conflict with Iran, which has now entered its second week, could alleviate some of the pressure impacting gold prices. Recent events, including the effective closure of the Strait of Hormuz and Iranian missile strikes targeting energy infrastructure, have caused a surge in oil prices and heightened inflation concerns.
Consequently, these developments have diminished the probability of interest-rate cuts by the Federal Reserve and other central banks. Typically, higher borrowing costs present challenges for gold, as it does not generate interest income. Furthermore, the safe-haven asset has been utilized as a source of liquidity amidst a downturn in global equities as the war has progressed.
As of the latest update, spot gold was up 0.6 per cent, trading at $US5169.93 an ounce.
