Gold falls from one-month peak as investors look to US-Iran negotiations

Gold eased from one-month highs on Wednesday, with investors gauging developments surrounding US-Iran talks to bring hostilities in the ​Middle East to an end, as oil prices stayed ​firm on supply concerns from the Strait of Hormuz closure.

Spot gold ‌was down 0.7% at $4,806.77 per ounce, as of 1131 GMT, after hitting its highest since March 18 earlier. U.S. gold futures for June delivery fell 0.4% to $4,829.70.

"To some extent it's some spurious correlation (given) the fact that both (equities and gold) react to oil price development. So low oil prices, good for economic growth, so good for equities. Low oil prices, low inflation, good for gold because central banks can cut rates," said UBS analyst Giovanni Staunovo.

World shares edged towards record highs after U.S. President Donald Trump said ‌talks with Iran could resume over the next two days, with oil prices up over 1% as exports remain constrained by the closure of the Strait of Hormuz.

"I would say it's a wait-and-see mode, to get more clarity about what's happening next, because nothing is moving much at the moment," Staunovo added.

Trump said negotiations between U.S. and Iranian officials could resume in Pakistan ​in the next two days. This, even as, the U.S. said that its military had completely ‌halted trade going in and out of Iran by sea.

Bullion has fallen close to 10% since the U.S. and Israel launched their war ​on ‌Iran on February 28 sending oil prices soaring. Gold is often looked to as ‌an inflation-hedge, but higher interest rates dampen the non-yielding asset's appeal.

Investors see a 31% chance of at least one 25-basis-point U.S. rate cut this year, ‌easing ​from 34% on ​Tuesday, as per CME's FedWatch Tool. [FEDWATCH]

Among other metals, spot silver fell 1% to $78.77 per ounce while platinum gained 0.2% to $2,107.36. Both metals rose ‌to a one-month ​high earlier. Palladium was up 0.6% at $1,596.74.

 

Crude oil prices stable as Hormuz constraints counter hopes for talks

 

Oil prices were broadly stable after steep falls in the previous session as shipping through the Strait of Hormuz remained constrained, countering expectations of US-Iran talks aimed at ending the war in West Asia.

 

Forty-five days after Iran’s Revolutionary Guards declared the strait closed, effectively shutting in about 20 per cent of global oil and liquefied natural gas shipments, transit through the waterway remains at only a fraction of the 130-plus daily crossings seen before the war, sources said on Tuesday.    The US has enacted a blockade of shipping leaving Iranian ports that its military said on Wednesday has completely halted trade going in and out of the country by sea. Brent crude futures were up 49 cents, or 0.5 per cent, at $95.28 a barrel at 1315 GMT.