Gold Rises as Inflation Fears Decline Thanks to Falling Oil Prices

SadaNews Economy - Gold prices have rebounded after reaching their lowest levels in about a week in previous sessions, supported by falling oil prices amid hopes for the resumption of peace talks between the United States and Iran, which contributed to calming inflation fears.

The price of gold in spot transactions rose by more than 2% to $4,825.38 per ounce.

U.S. President Donald Trump stated that talks to end the war with Iran may resume in Pakistan in the coming days, after Washington pushed for a blockade on Iranian ports following the collapse of recent negotiations.

Bob Haberkorn, Senior Market Analyst at RJO Futures, said that the direction of gold will depend on the progress of discussions in Pakistan and the type of advancements made, adding that the decline in the dollar and falling oil prices are helping the precious metal continue to rise.

U.S. data showed that producer prices rose less than expected in March, as service costs remained stable; however, rising energy prices due to the war with Iran intensified inflationary pressures. Although gold is used as a hedge against inflation, it becomes less attractive when interest rates rise, as it does not yield any returns.

Investors currently foresee a 33% chance of an interest rate cut this year, compared to previous expectations of two cuts before the war broke out. Analysts at Commerzbank stated that as long as the market does not begin to take the possibility of the Fed raising interest rates seriously, it is unlikely that gold will drop further.