Bullion recorded an encouraging recovery performance with a 3% increase as Iranian President Masoud Pezeshkian hinted that their side is ready to open the door to negotiations to end the war.
At 9.10 am, the price of gold was at $4,709, up about 0.90% since it opened in early trading on Wednesday in the Asian session.
Gold prices found support as bearish speculation prompted buying interest among traders, further supported by a fall in US Treasury bond yields. The US 10-year note yield fell four basis points to 4.31%, thus weighing on the value of the US dollar as the US Dollar Index (DXY) fell 0.58% to 99.91.
Geopolitical developments also affected market sentiment as reports said US President Donald Trump was ready to end the campaign against Iran even though the Strait of Hormuz is still partially closed.
At the same time, Iran has signaled that it does not want war, but remains ready to end it if security guarantees are met.
In a related development, US Defense Secretary Pete Hegseth announced that peace talks are now active and showing progress, with priority given to a negotiated settlement.
From an economic perspective, US data showed signs of weakness in the labor market. The JOLTS report recorded job openings in February falling to 6.882 million compared to 7.24 million previously, and lower than expectations of 6.92 million.
Although The Conference Board's Consumer Confidence Index rose to 91.8 in March from 91.0 previously, consumers still expect continued price pressures, mainly driven by rising energy costs.
Meanwhile, Kansas City Fed President Jeffrey Schmid warned that the surge in energy prices cannot be considered temporary and risks maintaining inflationary pressures. The statement reflected a more hawkish monetary policy stance in the face of current uncertainties.
Along with this, expectations of a Fed interest rate cut are fading as the market takes into account the impact of high energy prices.
While investors previously expected at least two rate cuts of 25 basis points, the US central bank is now seen as likely to maintain monetary policy without easing until 2026.
