Bullion is showing a lackluster trend heading into the week amid easing geopolitical tensions following US-Iran talks and possible expectations of a ceasefire between Israel and Lebanon, according to President Donald Trump.
At 9 am, gold was trading at $4,795, up 0.13% since it opened early Friday in Asian trading.
Speculation of a deal between the United States and Iran gave positive sentiment to Wall Street as the three major indexes closed higher. However, the talks appear to have yet to reach a conclusion as both sides are currently reviewing a memorandum to avoid a prolonged conflict.
Sources reported that Washington and Tehran are moving closer to an agreement on several key issues including the strategic passage through the Strait of Hormuz.
However, Iran is demanding that the freeze on its funds be lifted as a condition for allowing ships to pass through Omani waters. At the same time, the nuclear issue remains the biggest obstacle in the talks.
US President Donald Trump announced that Israel and Lebanon had agreed to a 10-day ceasefire, easing tensions between Israel and Hezbollah amid a wider conflict involving Iran.
On the economic front, data showed the US labor market remained solid. Initial Jobless Claims fell to 207,000 for the week ended April 11, lower than expected.
However, JOLTS and hiring data showed modest momentum, reflecting a slowing but still strong labor market activity.
On the other hand, the industrial sector showed signs of slowing as Industrial Production fell to -0.5% in March, driven by declines in the automotive, parts and utilities sectors.
Federal Reserve officials continued to maintain a cautious approach to monetary policy.
New York Fed President John Williams said the Iran conflict could increase inflationary pressures, while Stephen Miran expected only three interest rate cuts compared to four previously due to less encouraging inflation developments.
The easing of geopolitical tensions reduced demand for safe-haven assets such as gold. However, if crude oil prices continue to decline, inflationary pressures could ease and open up space for monetary policy easing, thus supporting a rise in precious metal prices in the medium term.
