Gold steadied on Monday as prospects for a potential Israel-Iran ceasefire helped the metal rebound from session lows, though strong U.S. jobs data boosted expectations of a Federal Reserve rate hike and limited the upside.
Spot gold was up 0.33% at $4,343.03 an ounce, after hitting its lowest level since March 23 earlier in the day at $4,268.39.
U.S. gold futures for August delivery was up 0.05% at $4,367.30.
President Trump said on Monday that both Israel and Iran were looking to “do an immediate ceasefire” and that final negotiations on “peace” were proceeding.
“We rebounded off the overseas lows just on news that perhaps there’s a new ceasefire between Iran and Israel. So that’s taken a little bit of pressure off the downside,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
While gold is traditionally sought as a safe haven during conflict, a peace deal would reduce energy-driven inflation risks and ease the pressure on central banks to keep interest rates high. Higher interest rates tend to weigh on non-yielding gold.
Limiting the upside for gold prices, the dollar traded near its highest level in almost two months after a stronger-than-expected U.S. jobs report last week boosted expectations for a year-end interest rate hike.
A stronger dollar makes greenback-priced commodities more expensive for other currency-holders.
Traders are now pricing in a 43% chance of a quarter-point rate hike in December, up from just about 14% a month ago, according to the CME Group’s FedWatch tool.
Investors now await U.S. consumer price index (CPI) data for May on Wednesday and a producer price index report on Thursday, also for May, for further clues on the Federal Reserve’s interest rate path.
“Gold may next test the psychologically important $4,000 line for critical support if markets receive hotter-than-expected CPI prints this week, or a decidedly hawkish FOMC next week,” said Han Tan, chief market analyst at Bybit, referring to the central bank’s policy-setting Federal Open Market Committee.
Spot silver was up 1% at $68.52 per ounce. Platinum lost 1.3% to reach $1,752.87, while palladium fell 1.3% to $1,209.29.
