Gold steady with US-Iran talks, central banks in focus
Gold held steady on Tuesday as investors awaited more clarity on stalled peace talks between the United States and Iran, as well as key central bank decisions this week to see if the Middle East conflict has altered the interest rate outlook.
Spot gold was down 0.1% at $4,679.06 per ounce, as of 0217 GMT. U.S. gold futures for June delivery were steady at $4,693.20.
"Geopolitical headlines are still the main driver (of gold prices). In the event of a deal (between the U.S. and Iran) or an interim deal, the dollar should weaken and gold will likely break out to the upside," said Marex analyst Edward Meir.
Pressuring gold prices, the dollar edged higher and oil prices extended gains as the crucial Strait of Hormuz waterway remained largely shut. [USD/] [O/R]
Higher crude oil prices can stoke inflation by raising transportation and production costs, increasing the likelihood of higher interest rates. While gold is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing on its appeal.
U.S. President Donald Trump is unhappy with the latest Iranian proposal on resolving the two-month war, a U.S. official said, dampening hopes for a resolution to the conflict that has disrupted energy supplies, fuelled inflation, and killed thousands.
Meanwhile, the U.S. Federal Reserve is widely expected to hold interest rates steady at the end of its two-day meeting on Wednesday.
"The Fed is going to be largely irrelevant. They're not going to be doing anything on rates for now," said Meir, adding that it might cut rates later in the fourth quarter as "we're heading into a global slowdown."
Investors will also be focusing on other central bank decisions this week, including from the Bank of Japan, the European Central Bank and the Bank of England.
Spot silver fell 0.8% to $74.91 per ounce, platinum gained 0.4% to $1,990.29, and palladium was down 0.7% at $1,466.44.
