Gold Steadies Ahead of US-Iran Talks

Gold held above $4,000 an ounce on Tuesday after falling nearly 2% in the previous session, as investors looked ahead to the resumption of US-Iran peace talks in Doha that could help ease inflation concerns. Still, a key obstacle remains after Tehran reaffirmed its intention to oversee traffic through the Strait of Hormuz even if Oman chooses not to participate. Shipping through the strategic waterway slowed over the weekend following renewed clashes that left two vessels damaged, although tanker operators and their crews have shown a willingness to continue transiting the route. Still, gold remained under pressure as markets continued to price in multiple US Federal Reserve interest rate hikes this year, with the first potentially coming in September. The precious metal is on course to lose more than 11% this month and around 14% this quarter, marking its steepest quarterly decline on record.

Gold fell to $4,040 an ounce on Monday, as uncertainty over US-Iran peace talks stoked inflation concerns and reinforced expectations of Federal Reserve interest rate hikes. The precious metal is on track for a fourth straight monthly loss, with a decline of over 10% this month. The US and Iran agreed to halt hostilities in the Gulf and resume talks over the Strait of Hormuz. US President Donald Trump revealed Tehran sought a meeting with an American delegation in Qatar on June 30, following Iran’s missile and drone strikes on US military sites in Kuwait and Bahrain. Trump had earlier warned Iran of severe consequences if it failed to honor a peace agreement. Gold, typically an inflation hedge, loses appeal in high-rate environments as it yields no income. Markets now price in three Fed rate hikes this year, with a 60% chance of a September increase. Investors also await key US jobs data later this week.

Gold fell to around $4,050 an ounce on Monday, snapping a two-day rebound as renewed exchanges of attacks between the US and Iran over the Strait of Hormuz lifted oil prices and rekindled inflation concerns. The conflict escalated since Thursday, with Iran targeting a container ship, a vessel carrying Qatari oil, and military bases in Kuwait and Bahrain, prompting multiple US retaliatory strikes. However, both sides later agreed to suspend further attacks ahead of peace talks set to resume this week in Doha, Qatar. Meanwhile, data last week showed US PCE inflation broadly matched expectations, leading investors to slightly pare back bets on Federal Reserve rate hikes this year. Markets are now awaiting the latest US monthly jobs report and the ISM Manufacturing PMI for further clues on the outlook for monetary policy.