Gold Dips With Focus on US Hormuz Plan and Iran Peace Talks

(Bloomberg) — Gold fell, following a second weekly decline, as traders monitored progress toward a US-Iran deal and President Donald Trump’s plan to start guiding some ships through the Strait of Hormuz.

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Bullion dropped as much as 0.9% and traded around $4,575 an ounce in early European hours on Monday. Trump said in a social media post on Sunday that the US will begin guiding some ships that aren’t involved in the Iran conflict out through Hormuz starting Monday. Oil was steady as traders questioned the workability of the plan.

Trump on Saturday suggested the Islamic Republic’s latest peace proposal might not be enough to satisfy him. The conflict has kept energy prices elevated, dimming hopes for interest-rate cuts by central banks, a negative for non-yielding bullion. Gold has lost around 12% since the war began at the end of February.

A stronger dollar and oil-driven inflation fears are prompting a wave of hawkish signals from major central banks, said Manav Modi, commodities analyst at Mumbai-based Motilal Oswal Financial Services Ltd.

Looking ahead, traders will focus on this week’s announcement of the US Treasury Department’s borrowing plans for the next three months, an array of Federal Reserve speakers and a loaded calendar of economic releases, crowned by monthly employment data. The information should give clues on the trajectory of rates and the US fiscal deficit.

Many market watchers are still positive on the metal’s longer-term outlook, supported by buyers who have continued purchases despite recent slumps. The latest data from the producer-funded World Gold Council showed that central banks added gold holdings at the fastest pace in more than a year in the first quarter, while Tether Holdings SA extended a buying streak that’s made it the largest known holder of bullion in the world outside of banks and nation states.

Spot gold dipped 0.8% to $4,577.33 an ounce as of 9:09 a.m. in London. Silver fell 1.4%, while platinum and palladium also declined. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat.

–With assistance from William Clowes.