Gold prices edged lower on Wednesday, after hitting a one-month high earlier in the session, as risk appetite improved due to the prospect of renewed peace talks between the United States and Iran, along with rising oil prices that increased inflationary pressures.
In this context, US President Donald Trump announced that talks to end the war with Iran may resume in Pakistan within the next two days, following the collapse of weekend negotiations.
The impact of geopolitical news on markets
Edward Meir, an analyst at Marex, explained that gold prices move in the short term according to developments in the Middle East, with growing hopes that the two sides will enter a new round of negotiations.
He added that if these efforts falter again, the markets could revert to the pattern that preceded the ceasefire, characterized by a decline in gold, a rise in the dollar, and a drop in stock markets.
Gold has risen by about 1.6% since the start of the week, as markets react to political and economic developments.
Optimism in the markets and rising oil prices
Asian stocks hit their highest level in six weeks, fueled by investor optimism that the war with Iran could be eased soon.
In contrast, oil prices rose as a result of continued uncertainty about crude supplies from the Middle East, with the Strait of Hormuz remaining largely closed.
Higher oil prices contribute to increased inflation rates by raising transportation and production costs, creating a complex equation for the markets.
Balance between inflation and monetary policy
Gold is usually seen as a hedge against inflation, but rising interest rates put pressure on demand for the metal because it does not generate a return.
In this context, the US military announced that US forces had completely halted maritime trade to and from Iran by imposing a blockade on its ports.
On the other hand, expectations of interest rate cuts in the United States have risen, with traders seeing a 29% probability of a 25-basis-point cut this year, compared to about 13% last week, while pre-war expectations pointed to two cuts during 2026.
OCBC Bank analysts noted that recent market movements reflect a clear risk appetite, despite the strong overnight rise in gold and silver prices.
Gold at settlement yesterday
Gold prices rose at the close of trading on Tuesday, supported by a weaker dollar and the US president's indication that negotiations with Iran could resume this week.
Gold futures for June delivery rose 1.73%, or $82.70, to $4,850.10 an ounce.
Gold now
Spot gold fell 0.7% to $4,809 an ounce, after hitting its highest level since March 18 earlier in the session.
Meanwhile, U.S. gold futures for June delivery fell 0.4% to $4,831 an ounce.
Other minerals
Regarding other metals, silver prices rose by 0.4% to $79.88 per ounce, and platinum also climbed by 0.4% to $2,112.05.
Palladium rose 0.1% to $1,588.29 an ounce, amid mixed performance among precious metals during trading.
