- Gold prices rose for a third day, nearing $4,740 an ounce amid Iran war talks
- US to hold direct talks with Iran while Tehran objects to Israeli strikes in Lebanon
- Oil prices rebounded after a sharp drop, stocks declined, and the dollar was steady
Gold inched higher for a third day as traders weighed the prospect of a diplomatic resolution to the Iran war, even as ongoing tensions threatened to derail a fragile ceasefire.
Bullion traded near $4,740 an ounce, extending a 1.5% gain over the previous two sessions. The White House said the US would hold direct talks with Iran, while Tehran cast Israeli strikes in Lebanon as a violation of the truce. Attacks declined across Arab states in the Persian Gulf, but traffic through the Strait of Hormuz remained restricted by Iran.
Oil rebounded after its biggest one-day drop since April 2020, while stocks declined and a gauge of the dollar was little changed on Thursday. Bullion has traded largely in tandem with stocks since the war began nearly six weeks ago, with its haven appeal dimmed by some investors' need to cover losses elsewhere.
“Gold's role as a liquidity provider — rather than a portfolio diversifier or a safe haven — remains at the forefront,” analysts at Standard Chartered Plc including Emily Ashford said in a note. “The recovery looks fragile in the short term,” they said, adding that bullion was likely to find a more supportive footing in the physical market.
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Now in its second month, the war has driven a spike in energy prices and raised inflationary risks, making it more likely that central banks will delay cutting interest rates or even hike them. This is a headwind for non-yielding gold, which benefits when borrowing costs are low.
A protracted war, however, could also lead to a slowdown in growth, hurting the labor market and warranting lower rates. Minutes of the Federal Open Market Committee's March 17-18 meeting released Wednesday showed policymakers wrestling with these starkly different scenarios for the US economy.
Gold will slowly find its way higher, even if the crisis becomes prolonged, James Luke, a senior portfolio manager at Schroder Investment Management Ltd., said in a note. The metal will continue to see support from the so-called debasement trade, driven by fiscal concerns and the need to hedge against the US dollar, he added.
The recovery in gold and silver may be short-lived if tensions re-escalate, according to Renisha Chainani, research head at Mumbai-based gold trading platform Augmont Enterprises Ltd. “The ceasefire has too many unresolved variables to sustain a durable rally.”
Spot gold was up 0.4% at $4,740.26 at 12:15 p.m. London time. Silver was little changed at $74.11 an ounce. Platinum and palladium were also steady. The Bloomberg Dollar Spot Index was flat after ending the previous session down 0.8%.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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