Gold prices moved sharply higher on Tuesday following an unconfirmed report that hinted at a potential one-month ceasefire between the U.S. and Iran.
The yellow metal had been mostly subdued earlier as investors assessed conflicting accounts of whether the U.S. and Iran have been engaged in talks to end hostilities.
After the closing bell on Wall Street, Israeli Channel 12 said U.S. Middle East Special Envoy Steve Witkoff and American businessman Jared Kushner were working on a mechanism that would introduce a ceasefire and allow the U.S. and Iran to negotiate on a 15-point plan. The New York Times later reported that the U.S. had sent a plan to Iran to end the war.
Spot gold reacted to the unconfirmed media alert with a sharp upward move, adding 1.5% to settle at $4,474.38/oz. Gold Futures advanced 1.5% to settle at $4,504.90/oz.
Trump reiterates Iran talks
Following President Donald Trump’s announcement about "productive" talks with Iran on. Monday, market participants were disappointed with a lack of clear answers on Tuesday. Contrasting media reports coming out of the Middle East kept investors on edge.
Trump later told reporters that Iran negotiations were ongoing and that Iran had agreed to "never have a nuclear weapon."
The president added that U.S. Secretary of State Mark Rubio and Vice President JD Vance were among people negotiating with Iran.
"We’re talking to the right people, they want to make a deal," Trump said, adding that Iran was "talking sense."
Trump also said Iran had given the U.S. a "big gift worth a lot of money" and that the gift was related to oil and gas.
Iran denies, sparking uncertainty
Trump on Monday also postponed a threat to bomb Iran’s energy infrastructure for five days. Trump’s announcement triggered a sharp decline in oil prices to levels not seen in roughly two weeks.
But the speaker of Iran’s parliament said on social media that no such talks had taken place, and accused Trump of making up the talks to soothe jittery financial markets.
CNN reported on Tuesday that there had indeed been "outreach" between the U.S. and Iran, initiated by Washington, but nothing that reached a level involving full on negotiations, citing a senior Iranian source.
Meanwhile, an Axios story said that the U.S. and a group of regional mediators were discussing the possibility of holding high-level peace talks with Iran as soon as Thursday, citing two sources with knowledge of the discussions.
Gold ’caught between two forces’
Gold prices have been under pressure since the start of the conflict in late February, with spot gold having shed 16.5%. The yellow metal last Friday notched its worst weekly performance since the first week of March 1983.
Typically acting as a safe haven during times of geopolitical crises, gold has failed to live up to that status during the ongoing situation in the Middle East. Instead, the dollar has emerged as a safe haven asset of choice, strengthening since the start of the Iran war and weighing on bullion.
Also weighing on gold has been expectations for higher interest rates for longer due to inflation concerns sparked by the surge in energy prices. Higher interest rates typically weigh on gold, as the non-yielding asset becomes less attractive compared with interest-bearing instruments such as government bonds.
"Even with geopolitical tensions, gold is still taking its cues from rates and the dollar, and both have been working against it. You’re seeing gold caught between two forces: geopolitical demand on one side and macro pressure from yields on the other,” Ed Egilinsky, managing director and head of global sales/distribution & alternatives at Direxion, told Investing.com.
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