Quick overview

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The precious metal declined as investors weighed conflicting statements regarding the Middle East conflict, and the delay of US strikes on Iran’s energy infrastructure only offered a brief respite from the precious metal’s precipitous decline during the war.

Bullion lost as much as 1.8 percent during a volatile session that followed stocks and posted an inverse with oil after rising by nearly 1 percent earlier. US President Donald Trump announced a five-day postponement of the attacks he had threatened on Iranian power plants and said that “productive discussions” had taken place.

However, the Wall Street Journal stated that US allies in the Persian Gulf might become involved in the conflict, and an Iranian official ruled out negotiations. The conflict’s high energy prices have made investors give up their relatively profitable and liquid gold holdings in favor of other assets, which also raises the risk of inflation.

The outcome of any negotiations and future ship passage through the Strait of Hormuz remains uncertain despite Trump’s announcement of a pause. Rebuilding even the current energy infrastructure damage will take time. As a result, non-yielding precious metals continue to face the threat of inflation and the anticipation of rate increases by the US Federal Reserve and other central banks.