Gold (XAU/USD) traded flat at around $4,545 at the weekend as investors took a cautious approach ahead of new developments in the ceasefire talks between the United States and Iran.
Market sentiment remained mixed with traders still assessing geopolitical risks in the Middle East and the direction of US monetary policy.
At 9.20 am, gold was trading at $4,531, down 0.26% since it opened early Friday in Asian trading.
Iranian officials said that the latest proposal from the US had managed to narrow some of the gap between the two sides, but several key issues remained obstacles to a full resolution.
Statements by Iran's Supreme Leader regarding efforts to maintain Tehran's uranium stockpile and a dispute over tolls in the Strait of Hormuz further clouded the prospects for the talks' success.
Meanwhile, Donald Trump on Wednesday warned that the United States may launch another attack in the near future if Iran fails to meet Washington's conditions.
The statement has reignited market concerns about the risk of greater conflict in the region.
Kiran Kowshik, Global FX Strategist at Lombard Odier, said gold typically performs better when real bond yields fall and the US dollar weakens.
However, a shock to energy supply could backfire as markets begin to anticipate higher central bank interest rates, supporting a strengthening in bond yields and the US dollar.
In addition to geopolitical factors, markets are also paying attention to the change in leadership at the US Federal Reserve (Fed). Kevin Warsh will replace Jerome Powell as Fed chairman when Powell's term ends on Friday, before Warsh officially takes over.
He is expected to chair the first policy meeting of the Federal Open Market Committee (FOMC) at its June meeting.
For now, gold is expected to remain cautious as the market awaits clearer direction from Middle East geopolitical developments and the Fed's monetary policy approach under new leadership.
