Prime Highlights:
- Gold prices moved higher as hopes of reduced tensions between the U.S. and Iran supported investor sentiment.
- Even without confirmed talks, expectations of possible discussions helped ease oil prices and boost gold.
Key Facts:
- Spot gold rose 0.7% to $4,504.58 per ounce, while U.S. gold futures jumped 2.3% to $4,534.90 per ounce.
- Around $11 billion was withdrawn from commodity ETFs in March, marking the largest monthly outflow on record.
Background:
Gold prices rose on Wednesday as hopes of easing tensions in the Middle East lifted market sentiment, even as Iran pushed back against a proposed ceasefire plan from the United States.
Spot gold increased by 0.7% to $4,504.58 per ounce, while U.S. gold futures jumped 2.3% to $4,534.90 per ounce. The gains came as investors reacted to mixed signals surrounding possible negotiations between Washington and Tehran.
The U.S. suggested a 15-point peace plan, asking Iran to shut down its nuclear sites and reopen the Strait of Hormuz, which is important for oil transport. But Iran refused, saying it is not ready for talks and that no official discussions are happening.
Iran’s Foreign Minister Abbas Araghchi stated that while messages were being exchanged through intermediaries, these should not be seen as direct negotiations. State media also emphasized that Tehran would not allow the U.S. to dictate the terms or timing of any ceasefire.
Despite the diplomatic deadlock, even the possibility of dialogue helped ease oil prices. Brent crude briefly fell below $100 per barrel, although it remains higher than pre-conflict levels. Lower oil prices tend to reduce inflation concerns, weaken the dollar, and support gold prices.
At the same time, gold’s role as a traditional safe-haven asset has been less consistent during the current conflict. Analysts noted that a stronger U.S. dollar and expectations of prolonged high interest rates have limited gold’s appeal in recent weeks.
Market analysts say gold may regain momentum as the dollar weakens, but uncertainty remains. Some investors think the U.S. Federal Reserve may not cut interest rates soon and could even raise them, which may put pressure on gold prices.
At the same time, commodity ETFs saw large withdrawals in March, with around $11 billion pulled out, the highest ever for a single month. Investors are changing their approach due to market uncertainty.
Middle East tensions and changes in talks and energy prices are influencing gold, keeping investors cautious.