Gold Rises After Progress in Talks Between Washington and Tehran

SadaNews - Gold rose after negotiators announced progress in talks between the United States and Iran to reach a lasting solution to the war that has disrupted global markets.

The precious metal climbed by up to 1.6% to exceed $4,190 an ounce, erasing losses from last week, after Qatar and Pakistan stated in a joint statement that "encouraging progress" was made in the first round of high-level peace negotiations in Switzerland. They remarked that the talks would continue for the remainder of the week, easing concerns after U.S. President Donald Trump had previously issued a new threat to strike Iran.

Among other things, a line of communication was established between Tehran and Washington aimed at securing a safe passage for commercial vessels through the Strait of Hormuz.

Oil prices fell on Monday, and crude continued to flow through the strait over the weekend. The United States and Iran signed a memorandum of understanding last week that initiated a de-escalation process and opened a 60-day window for further talks.

Interest Rate Hike Expectations Weigh on Gold

Gold has declined for three consecutive weeks, and is down more than a fifth since the war began at the end of February. The near closure of the Strait of Hormuz has choked off oil and natural gas flows and driven energy prices up, increasing the likelihood that central banks will raise borrowing costs to combat inflation. This poses headwinds for precious metals, which do not yield interest.

The newly appointed Federal Reserve Chair Kevin Warsh adopted a hawkish tone regarding inflation during his first monetary policy meeting last week, without giving any clear signals about the future path of interest rates. Looking ahead, traders will monitor the U.S. Personal Consumption Expenditures Price Index set to be released on Thursday, which is expected to show an acceleration.

Silver Price

Silver prices were also recorded near $66 per ounce.