Gold Gains Increase Supported by Signs of De-escalation Between Washington and Tehran

SadaNews Economy - Gold extended its gains as the easing of the likelihood of a ceasefire agreement between the United States and Iran alleviated some inflationary concerns that had pressured the precious metal.

The precious metal rose by as much as 0.4% to trade around $4,585 an ounce, after ending the previous session up 0.6%.

President Donald Trump said on Monday that he had authorized a new wave of attacks on Iran this week, but postponed them after three Gulf allies requested more time, allowing space for negotiations on a nuclear agreement.

Trump stated that the leaders of Saudi Arabia, the UAE, and Qatar asked him for the postponement because they believe they can reach an acceptable agreement with Iran that would be accepted by the United States.

Earlier, the White House said that a proposal submitted by Iran through Pakistani mediators on Sunday lacked substantial improvement, according to Axios.

Treasury yields hovered near their highest levels in several years, while elevated energy prices continued to fuel inflation concerns. This reduces the attractiveness of gold, which does not yield any returns.

Gold has traded in a narrow range since its sharp decline in the early days of the war, as the possibility of monetary easing due to growth fears has mitigated inflation concerns. The precious metal has dropped more than 13% since the outbreak of the war.

Fasoo Minon, a strategist at Oversea Chinese Banking Corp, said, "Liquidity regarding the situation in the Middle East, along with oil prices and bond yields," may continue to pressure gold in the short term.

He added: "We continue to view gold as a useful hedging instrument amid global uncertainty, given the significant political and economic changes occurring worldwide, which seem poised to gain momentum in the coming years."