Gold prices (XAU/USD) moved sideways as investors took a cautious approach ahead of the progress of negotiations between the United States (US) and Iran in Doha.
At 9 am, gold prices were trading at $3,988, down 0.46% since it opened early Wednesday in the Asian session.
Market attention is now focused on the prospects of the negotiations after both countries issued conflicting statements. US President Donald Trump claimed that Iran had requested a meeting following the escalation of tensions after the US airstrikes last weekend. However, a spokesman for the Iranian Foreign Ministry denied that any official talks were scheduled in the near future.
In related developments, US representatives Jared Kushner and Steve Witkoff reportedly arrived in Doha to meet with the Prime Minister of Qatar to discuss the US-Iran negotiations and the regional situation. However, so far there has been no confirmation of an official meeting at the highest level between the US and Iran.
Any positive developments in the peace talks could support gold prices as a safe-haven asset. However, if the talks fail to show progress or tensions flare up again, the market could expect higher inflationary pressures. This could increase expectations that interest rates will remain high for longer, reducing the appeal of gold, which does not offer a yield.
At the same time, investors are also awaiting the release of the US ADP employment data on Wednesday and the Nonfarm Payrolls (NFP) report on Thursday. If both data are stronger than expected, it could reinforce the Federal Reserve's (Fed) stance to keep interest rates high for longer.
This scenario could strengthen the US dollar and put pressure on gold prices in the near term. Therefore, the direction of the precious metal is expected to depend largely on the combination of geopolitical developments and US economic data this week.
