Gold Falls as New Round of Peace Talks Between US and Iran Awaits

SadaNews - The price of gold has declined as traders gauged the prospects of reaching a negotiated settlement to the war in Iran, which has disrupted global energy supplies and increased inflation risks.

The precious metal fell by as much as 0.6% to trade near $4,789 per ounce, after having declined 0.2% in the previous session.

U.S. Vice President J.D. Vance is heading to Pakistan for a new round of talks, while Iran is also sending a delegation after previously expressing reluctance to participate, according to sources familiar with the plans.

U.S. President Donald Trump stated that the two-week ceasefire is set to end "Wednesday evening Washington time."

Manav Modi, a commodities analyst at Motilal Oswal Financial Services in Mumbai, noted in a memo: "Markets remain on edge regarding whether new peace talks will materialize before the ceasefire ends this week, with mixed signals from both sides adding to volatility." He added, "With ongoing uncertainty linked to geopolitical conditions and policy expectations, gold remains under pressure."

Inflation Pressures Limit Gold's Appeal

Oil prices fell on Tuesday, while global stocks resumed their upward trend after a brief pause.

As the war in the Middle East enters its eighth week, it has caused unprecedented shocks to energy supplies, intensifying inflationary pressures and prompting central banks to be more inclined to keep interest rates unchanged or even raise them, which is a negative factor for non-yielding gold. Gold has lost about 9% since the conflict began in late February.

Mark Lufert, a trader at Heraeus Precious Metals GmbH, wrote in a memo that the decline of gold during wartime does not change "the fundamentals that support it."

He added, "Some repositioning and deleveraging are expected to occur during volatile periods across asset classes." He continued, "This volatility is likely to persist for some time, but in the long run, gold will retain its fundamental appeal as a means of preserving purchasing power."

Watching Fed Policy and Its Impact on Gold

Investors will also be watching Trump's nominee for the Federal Reserve Chair later on Tuesday, as Kevin Warsh presents his plans to the Senate Banking Committee.

Any indication that Warsh may advocate for monetary easing this year is likely to support gold, while a greater caution toward inflation and reluctance to cut rates would be negative for the metal.

In a nod to concerns surrounding the Fed's future, Warsh will pledge to protect the central bank's independence, according to a copy of his prepared remarks reviewed by Bloomberg.

In the latest trading, gold fell 0.5% in spot transactions to $4,793.8 per ounce at 12:22 PM in Singapore. Silver dipped by 1% to $78.95 per ounce.

Platinum and palladium also declined. Meanwhile, the Bloomberg Dollar Spot Index, which measures the performance of the U.S. currency, edged up slightly after closing the previous session down by 0.1%.

Silver Price

Silver prices were recorded near $79 per ounce.