Gold price (XAU/USD) gains momentum to a one-week high near $4,700 during the early Asian session on Thursday. The precious metal extends the rally as optimism over a US-Iran peace deal eased concerns over inflation.
Bloomberg reported on Wednesday that the US and Iran were circling a fresh proposal to end the war, as US President Donald Trump searches for an exit from a conflict that has spiked energy prices and damaged his political standing. Trump added that the war has “a very good chance of ending” and there’s a possibility that it will happen before his trip to Beijing next week.
Easing concerns over price pressures could convince the US Federal Reserve (Fed) to cut the interest rate rather than keep policy restrictive for longer. This, in turn, could provide some support to yellow metals as they signal a decrease in the opportunity cost of holding the metal.
“The optimism about a final deal between the US and Iran has caused at least some short-term relief in gold,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. However, he also cautioned that the market can still “pivot on Middle East headlines.”
Traders brace for the US employment report data for April later on Friday, as it might dictate the Fed's next move regarding interest rates. Any signs of improvement in the US labor market could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.
Comments
Log in or sign up to join the conversation.