Gold falls, and precious metals move lower in sync; a stalemate in US-Iran talks makes investors unwilling to chase prices

Tensions in the Middle East geopolitical situation have continued to intensify in recent times. Peace negotiations between the United States and Iran have stalled, causing international gold prices to face downward pressure recently. Professional firm MKS PAMP SA describes the current gold market as “lost in direction.” Gold is currently in a technically uncertain range; market confidence is weak, and large institutional funds are mostly on the sidelines. The international spot gold price (XAU) today is down about 0.7% to around $4,675 per ounce, and since the outbreak of conflict in late February, it has retraced by about 11% in total. Precious metals such as silver and palladium are also weakening in the same direction.

Geopolitical stalemate and energy supply shock

U.S. President Trump canceled the scheduled peace-negotiation itinerary in which envoys would travel to Islamabad, and Iranian President Pezeshkian also indicated that he refuses to hold talks under threats. This has led to the continued two-way blockade of the Strait of Hormuz, with about one-fifth of global oil shipments being disrupted. International oil prices have therefore risen. The break in the energy supply chain not only pushes up short-term energy costs, but also heightens global inflation pressure on the macroeconomic level, forcing the market to reassess the overall stability of the economic environment.

Impact of inflation expectations on central bank interest-rate policy

The inflation risk brought by rising energy prices effectively changes market expectations for monetary policy. In order to contain prices, central banks are more likely to keep interest rates at the current level, and even a rate hike is not out of the question—this is a clear headwind for assets such as gold that do not offer interest-bearing returns. In addition, the potential new Fed chair, Kevin Warsh, is expected to take a mild and step-by-step pace of rate cuts rather than an aggressive easing. With expectations that a higher interest-rate environment may persist, the U.S. dollar index strengthens, further weighing on gold price performance.

(Powell’s final dance? Middle East conflict boosts inflation; the Fed seen holding rates steady this week)

Lost direction for gold? Funds stay on the sidelines; near-term price action may get stuck

Against the backdrop of the above macro factors, the international spot gold price (XAU) today is down about 0.7% to around $4,675 per ounce, and since the outbreak of conflict in late February, it has retraced by about 11% in total. Precious metals such as silver and palladium are also weakening in the same direction.

Professional firm MKS PAMP SA describes the current gold market as “lost in direction.” Gold is currently in a technically uncertain range; market confidence is weak, and large institutional funds are mostly on the sidelines. Gold is currently showing characteristics of a risk asset, with an inverse correlation to oil prices. This indicates that under conditions of double uncertainty, the market’s willingness to chase prices has been significantly reduced.

Lien News previously compared gold’s performance during the Russia-Ukraine war and found that gold only rose briefly at the very beginning of the conflict, then fell for seven straight months. While major investment banks still look favorably on gold’s outlook, given that geopolitical risks remain high and funds are clearly staying on the sidelines, gold prices in the short term may get stuck.

(Gold price plunges 8% in one week to a 17-year low—how to look at the outlook by borrowing from the Russia-Ukraine war? Goldman still sees $5,400)

This article, “Gold falls; precious metals move lower in tandem; U.S.-Iran negotiation stalemate leaves investors unwilling to chase prices,” first appeared on Lien News ABMedia.