-- Gold rose for a third-straight session early Thursday on optimism a deal to end the war on Iran may be near, cutting into oil prices and pushing the dollar lower amid easing fears the supply shock around the war would boost inflation and force higher interest rates.
Gold for June delivery was last seen up $61.70 to US$4,756.00 per barrel, after rising by US$125,80 on Wednesday.
The rise comes amid optimism the United States and Iran are closer to a peace deal. The Wall Street Journal reported the two countries are working with mediators to come up with a framework to resume negotiations, with talks in Pakistan beginning as soon as next week on a 14-point memorandum of understanding offered by the Trump Administration.
Traders have been cautious about turning to gold as a safe haven during the economic turmoil that followed Iran's blockade of the Strait of Hormuz, blocking exports from Persian Gulf nations that supplied 20% of global oil demand. The high oil prices that followed the Feb. 28 start to the war has boosted inflation, heightening worries central banks will raise rates to slow demand, concerns eased by the prospect of talks that could bring an end to hostilities.
"Gold's reaction to ceasefire optimism yesterday reinforces our view that the underpinnings for gold remain intact and increases our conviction in our long-held call for gold to trade mostly in the $4500-5000/oz range this year," Christopher Louney, a gold and natural gas strategist at RBC Capital Markets, wrote.
The dollar fell early, with the ICE dollar index down 0.2 points to 97.82, the lowest since Feb.27. Treasury yields also eased, with the yield on the U.S. two-year note last seen down 3.1 basis points to 3.893%, while the 10-year note was paying 4.323%, down 2.8 points.