Gold Retreats as Risk Appetite Improves Amid U.S.-Iran Peace Talks
Gold prices retreated after hitting a one-month high earlier in the session on Wednesday, as optimism over potential U.S.-Iran peace talks lifted market risk appetite. Spot gold fell 0.6% to $4,811.19 per ounce by 0731 GMT, after earlier reaching its highest level since March 18. U.S. gold futures for June delivery dropped 0.3% to $4,834.40.
U.S. President Donald Trump said Tuesday that talks to end the Iran conflict could resume in Pakistan over the next two days, following the collapse of weekend negotiations. "Gold prices are reacting to Middle East headlines in the short term with hopes that the two countries will engage in talks," said Marex analyst Edward Meir. He added that if negotiations fail again, markets could revert to the pre-ceasefire pattern of lower gold, a stronger dollar, and weaker equity prices.
Despite Wednesday's decline, bullion is still up 1.3% so far this week. Asian stocks climbed to a six-week peak on investor optimism that the Iran war may soon wind down. Brent crude prices rose amid uncertainty over oil supplies from the key Middle East producing region, as the Strait of Hormuz remains largely shut. Higher crude prices feed into inflation by raising transportation and production costs.
While gold is traditionally seen as an inflation hedge, higher interest rates weigh on demand for the non-yielding metal. The U.S. military said late Tuesday that American forces have completely halted economic trade going into and out of Iran by sea through a blockade of Iranian ports.
In the U.S., traders now see a 29% chance of a 25-basis-point rate cut this year, up from about 13% last week. Before the war, expectations had been for two cuts in 2026. "While gold and silver rallied strongly overnight, the broader signal was decisively risk-on rather than defensive positioning," analysts at OCBC said in a note.
Among other metals, spot silver fell 0.3% to $79.31 per ounce, platinum gained 0.1% to $2,105.21, and palladium was steady at $1,586.63.
