Gold prices erased a chunk of their losses on Monday after Middle East de-escalation hopes swept across markets. The yellow metal remains under pressure however, due to expectations for higher interest rates due to the oil shock from the Iran war.
At 15:53 ET (19:53 GMT), Spot gold XAU/USD was down 1.7% to $4,408.33/oz, having fallen as much as 8.2% initially in the session. Gold Futures declined 3.6% to $4,444.81/oz.
Platinum shed 5.2% to $1,868.15/oz. Spot silver XAG/USD bucked the trend, gaining 1.9% to $69.0725/oz.
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Trump says spoke to Iran, touts end to war President Donald Trump said Washington held “good and productive” talks with Iran and had ordered a temporary delay to any planned military strikes on Iranian power plants and energy infrastructure.
In a social media post, Trump said that the talks over the last two days about arranging a “complete and total resolution” to hostilities were “productive.”
“Based on the tenor and tone of these” conversations, which will continue throughout the week, Trump said he had instructed the Pentagon to “postpone any and all military strikes” against Iranian power plants and energy infrastructure for five days.
However, Iranian state media said Tehran has had no direct discussions with the U.S. Iran’s foreign ministry spokesperson dismissed claims of any talks and said the country’s position on the Strait of Hormuz and the "prerequisites for ending the war remains exactly as before," state media said.
According to the Wall Street Journal, Iran’s Fars news agency reported that there are no direct or indirect communications with the U.S. Fars added that Trump has backed down on targeting Iranian power plants following Iranian threats to retaliate with strikes on similar sites in West Asia.
"We have had very, very strong talks. We’ll see where they lead. We have major points of agreement ... They went, I would say perfectly," Trump later told reporters outside Air Force One.
"We have a very serious chance of making a deal. That doesn’t guarantee anything ... We are in the throes of a real possibility of making a deal ... But again, I’m not guaranteeing anything," the president added.
Gold coming off worst week in over four decades Gold prices have been under pressure since the start of the conflict in late February, with spot gold having shed 15.4%. The yellow metal on Friday notched its worst weekly performance since the first week of March 1983.
Typically acting as a safe haven during times of geopolitical crises, the yellow metal has failed to live up to that status during the ongoing situation in the Middle East. Instead, the dollar has emerged as a safe haven asset of choice, strengthening since the start of the Iran war and weighing on bullion.
After trading in a tight band since the start of the conflict, gold broke through to the downside of that range last Thursday after several major central banks flagged caution over the inflationary effects of the conflict. This in turn fueled expectations for no interest rate cuts in the near-term – a scenario that bodes poorly for precious metals.
"Since the conflict began, surging energy prices have reduced prospects for near-term interest-rate cuts by the U.S. Federal Reserve and other central banks. This is a headwind for non-yielding gold, which has just posted its biggest weekly drop since 1983," Neil Welsh, head of metals at Britannia Global Markets, said.
"In the three weeks since the war began on Feb. 28, bullion’s decline has been driven partly by forced selling as investors seek to cover losses elsewhere in their portfolios. Meanwhile, hedge funds and other large speculators increased their net-long position for gold to the highest in seven weeks as of March 17, weekly U.S. government data published Friday showed," Welsh added.
