Gold hits three-week low as oil surges and central bank decisions near
Stalled U.S.–Iran talks lift crude prices, while markets brace for the Fed and other key policy meetings
Dubai: Gold slipped to a three-week low on Tuesday, tracking a jump in oil prices after stalled U.S.–Iran talks, as markets weighed inflation risks and interest-rate concerns ahead of a packed week of central bank decisions.
Spot gold fell 1.4% to $4,614.71 per ounce by 0924 GMT, its lowest level since April 7. U.S. gold futures for June delivery dropped 1.4% to $4,629.20.
“Today’s decline in gold (and silver) prices mirrors an increase in oil prices due to the lack of progress in the negotiations between the U.S. and Iran,” said Julius Baer analyst Carsten Menke.
U.S. President Donald Trump is unhappy with the latest Iranian proposal on resolving the two-month war, a U.S. official said, dampening hopes for a resolution to the conflict that has disrupted energy supplies, fuelled inflation.
Brent crude climbed above $110 a barrel, with the crucial Strait of Hormuz waterway remaining largely shut.
“The gold market seems more concerned by the risk of tighter monetary policy due to the impact of the war than the risk of slowing global growth,” Menke added.
Higher crude prices can intensify inflation pressures, increasing the likelihood of higher interest rates. While gold is traditionally viewed as a hedge against inflation, higher rates can reduce its appeal as a non-yielding asset.
The Bank of Japan held rates steady, but three of its nine board members proposed raising borrowing costs, signalling policymakers’ concerns about inflation pressures stemming from the Middle East conflict.
The U.S. Federal Reserve is also widely expected to keep rates unchanged at the conclusion of its two-day meeting on Wednesday.
Investors are also monitoring other central bank decisions this week, including those from the European Central Bank, the Bank of England, and the Bank of Canada.
The dollar strengthened, while benchmark 10-year U.S. Treasury yields rose to a three-week high, adding pressure on dollar-priced metals.
Spot silver fell 3% to $73.20 per ounce, platinum slipped 1.7% to $1,949.84, and palladium was down 2.2% at $1,444.72.