Gold prices traded within a narrow range on Thursday as investors closely monitored geopolitical developments and inflation risks. Market sentiment remained cautious despite signs of progress in negotiations between the United States and Iran.
After Asian markets opened, the price of one ounce of gold fell by 0.2 percent, trading at around $4,534. Analysts say two major factors continue to influence gold prices. On one hand, optimism about a possible end to tensions involving Iran has reduced demand for safe-haven assets like gold. On the other hand, rising concerns about inflation continue to support prices and prevent sharper declines.
U.S. President Donald Trump stated on Wednesday that negotiations with Iran had entered their final stages. However, he also warned that Iran could face tougher military action if it refused to sign an agreement. His comments increased expectations that both sides may be approaching a diplomatic breakthrough.
Kevin Wong, an analyst at Oanda advisory company, explained that Trump’s remarks created a more positive mood across global markets. According to Wong, investors now believe there is a greater possibility of easing regional tensions, which has negatively affected gold prices in recent weeks.
At the same time, higher yields on U.S. Treasury bonds have raised fears that the Federal Reserve could keep interest rates elevated for longer. Higher interest rates usually pressure gold because the precious metal does not provide interest returns compared with bonds and other financial assets.
Since the outbreak of the Iran conflict, gold prices have lost nearly 14 percent of their value. Analysts link this decline to rising oil prices, shifting investor confidence, and renewed fears of inflation in global markets. Despite the recent losses, traders continue to watch political developments and central bank policies closely, as both could determine gold’s next direction.
