Gold Steadies as US and Iran Offer Divergent Routes to End War

Gold steadied after a modest two-day recovery, as traders weighed conflicting statements from the US and Iran about negotiations to end the war in the Middle East.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Gold steadied after a modest two-day recovery, as traders weighed conflicting statements from the US and Iran about negotiations to end the war in the Middle East.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Bullion held near $4,500 an ounce, having gained more than 2% over the previous two sessions.

The White House insisted that talks with Iran are taking place and has compiled a 15-point peace proposal, while Tehran publicly rejected US overtures to end the conflict and issued conditions of its own. Even as it pursues diplomacy, the US has ordered thousands of troops to the region, fueling fears of a risky ground invasion. Since the war began nearly a month ago, gold has fallen nearly 15%, moving largely in tandem with stocks and in an inverse relationship with oil. Spiking energy prices have raised the risk of inflation and led investors to bet that central banks will keep interest rates unchanged, or hike them. That’s a headwind for non-yielding bullion.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The prospect of a rate hike by the Federal Reserve may be moderated by the risk of an economic downturn in the US caused by a protracted war. Wall Street is cutting its forecasts for the American economy this year, boosting its projections for inflation and unemployment and nudging up the odds of a recession.Around 85 tons of gold holdings in exchange-traded funds have been redeemed since the war began, according to a Bloomberg calculation. Even at $4,500 an ounce, a further 83 tons of holdings remain lossmaking and therefore vulnerable to liquidation, analysts from Standard Chartered Plc including Sudakshina Unnikrishnan said in a note. That’s around $12 billion based on gold’s closing price on Wednesday.“Frothy positioning is likely to remain vulnerable in the near term,” the analysts said. Spot gold rose 0.1% to $4,511.95 an ounce at 1:10 p.m. Singapore time. Silver edged up 0.2% to $71.32, while platinum and palladium also made small gains.

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