Gold prices increase after ceasefire

Gold prices firmed on Wednesday as lower oil prices, following a US extension of a ceasefire with Iran, eased fears of an inflation spike and prolonged high interest rates.

Spot gold rose 0.9% to $ 4,755.11 per ounce, as of 0225 GMT, after falling to its lowest level since April 13 on Tuesday.

US gold futures for June delivery gained 1.1% to $ 4,772.90.

US President Donald Trump said he would indefinitely extend the ceasefire with Iran to allow for further peace talks, hours ⁠before it was set to expire. Stocks gained, dollar eased and oil prices turned lower following the ceasefire extension.

Higher crude prices can stoke inflation ⁠by raising transportation and production costs. While gold is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing on the bullion’s appeal.

“Price action remains at the mercy of Middle East ceasefire headlines and liquidity needs,” Standard Chartered said in a note.

“While we note that the recent ⁠tick higher in prices has been fragile and is at risk of a short-term correction, we continue to expect (precious metals) prices to recover and gold in particular to retest record highs.”

Meanwhile, Federal Reserve ⁠chief nominee Kevin Warsh said on Tuesday he had made no promises to Trump about cutting interest rates, as he tried to assure US senators mulling his confirmation to lead ⁠the central bank that he would act independently of the White House while pursuing broad reforms.

Spot silver rose 1.5% to $ 77.84 per ounce, platinum gained 1.5% to $ 2,067.25, and palladium was up 1.8% at $ 1,560.31.

Source - The Morning