Gold firmed on Tuesday as optimism over Middle East peace talks helped ease fears of an inflation-driven rate hike. Spot prices held near $4,080.63 an ounce, but Fed policymakers' hawkish tone and a mixed Q2 for bullion kept the advance in check.
Spot gold rose 0.6% to $4,080.63 an ounce by mid-morning Tuesday, while gold futures gained 1.2% to $4,138.00 an ounce. The metal stayed confined to a range of roughly $4,000 to $4,100 as traders weighed mixed signals from the U.S. and Iran over reopening the Strait of Hormuz.
Middle East diplomacy lifts bullion
Fresh headlines on peace negotiations sent oil prices lower Tuesday, easing worries that a shipping disruption through the strait could spark an energy-driven inflation wave and push the Federal Reserve toward another rate hike. Brent crude fell 1.8% to $82.23 a barrel after gaining more than 2.5% earlier in the session. WTI crude dropped 2.6% to $78.24 a barrel over the same stretch.
U.S. Treasury Secretary Scott Bessent told CNBC he believed the U.S. and Iran were nearing an agreement to reopen the strait, saying: "there is a chance we may have a deal today or tomorrow". Qatar said a diplomatic push remained focused on de-escalation and reopening the waterway, though no agreement for direct talks was yet in place.
The diplomatic thaw contrasted with sharper rhetoric from President Trump, who described the moment as a final chance for Iran to reach a deal after calling off what he described as a major attack over the weekend. Iranian Foreign Minister Esmail Baghaei denied any revived dialogue was taking place, even as Tehran confirmed separate talks with Oman over the strait's status continued.
Fed policy keeps a lid on gains
Gold's advance came despite a steady dollar index and a hawkish undertone from the Fed. The Fed held rates last week, but three officials had already dissented in favor of a hike. New York Fed President John Williams said policymakers are prepared to raise rates if inflation persists. Markets now await this week's ADP private payrolls report and Friday's nonfarm payrolls data for further clues on the Fed's next move.
December futures opened Tuesday at $4,109.60 an ounce, up 0.5% from Monday's close. The metal is up 22% over the past year. Yet the gains follow a rough stretch: gold fell 14.1% in the second quarter, its worst quarterly performance since Q2 2013, according to TradingView data cited by Tether.
Physical reserves backing Tether Gold (XAUt) rose 9.5% in the second quarter, which Tether said reflected growing demand for tokenized gold exposure.
Sources: Commodities & Futures News, Yahoo Personal Finance, Cointelegraph.com News
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