Gold edged down from the highest in a week, as traders assessed swings in oil prices while waiting for economic data for clues on the US Federal Reserve’s interest-rate path.
Bullion traded below $4,200 an ounce, reversing earlier gains made in Asian trading hours. Brent crude swung between gains and losses as the market weighed resilient Middle East flows against rising regional tensions.
Gold is down by about a fifth since the US-Iran war started in late February, as disruptions to energy supplies from the Middle East quicken inflation, prompting some central banks to tighten monetary policy. Higher rates are typically a headwind for the non-yielding precious metal.
Still, gold has mostly held above $4,000, even as rates and government bond yields climb. That’s in part due to continued inflows into gold-backed exchange-traded funds, while some central banks like the People’s Bank of China have accelerated purchases .
The metal is caught between between strong structural investment and central-bank demand on one side and elevated bond yields and tighter monetary-policy expectations on the other, said Manav Modi, a commodities analyst at Motilal Oswal Financial Services Ltd.
“The macro backdrop remains challenging as persistent inflationary pressures continue to keep additional Fed tightening on the table, supporting Treasury yields and maintaining pressure on real rates,” he said.
The planned appearance by Fed chairman Kevin Warsh on Thursday in a discussion at the International Monetary Fund’s annual meeting in Bangkok could provide insights into the central bank’s thinking. Traders are also waiting for several economic releases including US inflation data this week.
Separately, US President Donald Trump claimed that Russia and Ukraine had agreed to an “energy ceasefire,” · which would help ease fuel supply and cost concerns, and could allow central banks to hold off on further tightening. Trump previously announced a similar ceasefire, only for Ukrainian President Volodymyr Zelenskyy to later say no deal had been finalized and the war continued.
Spot gold lost 0.5% to $4,175.30 an ounce as of 10:02 a.m. London time, while silver fell 0.4% to $60.56 an ounce. Platinum and palladium edged lower. The Bloomberg Dollar Spot Index was flat.