Quick overview

---

The precious metal increased as worries about inflation subsided amid fresh hope for a diplomatic resolution to the US-Iranian conflict.

 

Bullion recovered losses from the previous two sessions, rising as much as 0.8 percent to almost $4,770 per ounce. President Donald Trump claimed that Iranian officials had contacted his administration with the intention “to work a deal,” even as the US initiated a naval blockade of the Strait of Hormuz.

Separately, Iranian President Masoud Pezeshkian declared that Tehran was ready to carry on peace negotiations in accordance with international law.

Oil fell and was below $100 per barrel, supporting gold valued in US dollars. A headwind for non-yielding commodities, the decline in energy prices eased some of the inflationary pressure that has plagued bullion since the war started more than six weeks ago.

This has prompted traders to wager that central banks will keep interest rates unchanged or even raise them. However, worries about more shocks to the energy supply and economic suffering persist, particularly as the US blockade of Hormuz increases pressure on Iran.

The US Navy is taking action to prevent ships in the vital waterway from passing through Iranian ports and coastal regions.

US money markets are still pricing in a less than one-fifth chance that the Federal Reserve will lower interest rates by December due to the ongoing high levels of tension. Instead of acting as a geopolitical hedge, gold is still trading based on interest rate expectations.