ISLAMABAD: Gold prices held steady on Thursday as investors weighed a fragile U.S.-Iran ceasefire, preparations for talks in Islamabad and a fresh round of U.S. inflation data that could shape the Federal Reserve’s next move on interest rates. The metal stayed range-bound after a volatile week in which easing fears over a wider regional conflict competed with renewed concern that higher energy costs could keep price pressures elevated and reduce the case for near-term monetary easing in the United States.
Spot gold was little changed at $4,715.45 an ounce by 0716 GMT, while U.S. gold futures for June fell 0.8% to $4,739.40. The market’s muted tone came as traders looked to the U.S. Personal Consumption Expenditures report due later on Thursday and the March Consumer Price Index report scheduled for Friday. Both releases are being closely watched after a recent jump in oil prices complicated the inflation outlook and revived debate over how restrictive U.S. policy may need to remain.
Attention also remained on diplomacy after Pakistan said Iran had confirmed participation in negotiations with the United States in Islamabad, while Iran’s ambassador to Pakistan said an Iranian delegation would arrive on Thursday night. The talks follow a two-week ceasefire announced earlier this week. Even so, the truce has remained under strain, with heavy Israeli strikes in Lebanon and continued uncertainty over shipping through the Strait of Hormuz keeping investors alert to the risk of renewed disruption across the region.
Markets weigh inflation signals
Oil prices rebounded toward $97 a barrel on Thursday after a sharp drop in the previous session, reflecting doubts over how durable the ceasefire will prove and whether normal energy flows can resume quickly. That has kept inflation concerns alive in financial markets and helped explain gold’s restrained performance. Spot gold is still down more than 10% from levels seen when the conflict began on February 28, as the surge in energy costs pushed investors to reassess the path for U.S. interest rates.
Minutes from the Federal Reserve’s March 17 to 18 meeting, released on Wednesday, showed a broader willingness among policymakers to consider rate increases if inflation remains above the central bank’s 2% target. The Fed left its benchmark rate unchanged in a 3.50% to 3.75% range at that meeting, but the minutes showed concern that sustained energy-driven price pressures could feed through to underlying inflation. Higher rates typically weigh on bullion because gold does not offer a yield.
Ceasefire leaves traders cautious
Moves in other precious metals underscored the cautious mood. Spot silver slipped 0.3% to $73.93 an ounce, platinum fell 1.2% to $2,005.71 and palladium edged up 0.3% to $1,558.68. The mixed performance reflected a market still balancing gold’s traditional role as a store of value during geopolitical stress against the pressure that comes from a firmer rates outlook. With both forces in play, investors largely refrained from making aggressive directional bets ahead of the latest economic releases.
For now, gold remains tied to two immediate drivers: whether diplomacy in Islamabad can reinforce the ceasefire and whether U.S. inflation data show further signs of persistence. A stable reading could ease some pressure on rate expectations, while another firm print would likely reinforce the view that policy easing may be delayed. Until either picture becomes clearer, bullion is likely to stay sensitive to each new headline from the Middle East and each major U.S. macroeconomic release. – By Content Syndication Services.