Gold advanced above $4,700 per ounce as markets responded to renewed optimism that the US and Iran are moving toward diplomatic talks after days of deadlock. According to recent reports, President Donald Trump has paused attacks on Iran, with the latest developments showing Trump pauses attacks on Iran and renewed push for US-Iran talks easing geopolitical risks. This optimism has tempered US rate outlook and eased inflation fears, offering significant support to the precious metal despite lingering geopolitical uncertainties. The latest developments suggest Trump's envoys will send to Pakistan with the intention of meeting with Iranian officials, with special envoy Steve Witkoff and President's son-in-law Jared Kushner set to depart Saturday for talks this weekend.
Bullion rose above $4,700 an ounce as bond yields fell after US Attorney Jeanine Pirro said she's dropping her investigation into building-renovation cost overruns by the Federal Reserve. As reported by Bloomberg, the ending of this controversial investigation potentially cleared a path to confirmation for Kevin Warsh, President Donald Trump's pick to be the next Fed leader. Warsh is known for his hawkish stance on inflation, and investors don't expect him to deliver the aggressive rate cuts urged by Trump, but rather pursue a measured approach with gradual moves to lower borrowing costs.
Higher energy prices since the war began in late February have stoked concerns about inflation, which may prompt the Federal Reserve and its peers to keep interest rates elevated for longer or even raise them further. However, renewed optimism for a U.S.-Iran ceasefire has eased inflation fears and expectations of further US interest rate hikes, offering support to the precious metal. According to Bloomberg, that's negative for non-yielding bullion, as higher rates typically reduce demand for precious metals, but the current geopolitical developments are providing a counterbalance to these inflationary pressures.
Spot gold rose 0.6% to $4,718.98 per ounce as of 0222 GMT, while silver was up 1% at $76.47 per ounce. As reported by Bloomberg, platinum and palladium also gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, dropped 0.2%, making greenback-priced gold slightly cheaper for holders of other currencies. Meanwhile, the State Oil Fund of Azerbaijan, one of the largest sovereign gold buyers, released data showing it had sold nearly 22 tons of the precious metal in the first quarter, an amount worth more than $3 billion at current prices, as rapid price gains meant gold's share of the fund's portfolio was straining its target upper threshold of 35%.
