Gold Nears $4,630 As Dollar Retreat Offsets Iran War Inflation Risks

About this update from Gold Bond Group Ltd.

Gold (GLD) has regained some ground after the US dollar pulled back sharply, giving investors a fresh reason to revisit bullion even as inflation risks from the Iran war continue to pressure the broader setup. Bullion traded near $4,630 an ounce in early trading after gaining 1.5% in the previous session, while spot gold rose 0.3% to $4,632.84 an ounce at 7:43 a.m. in Singapore. The move followed a sharp rally in the yen, which surged more than 2% on Thursday for its biggest gain in three years after the Nikkei newspaper reported that Japan's government bought yen and sold dollars. That dollar weakness matters for gold because bullion is priced in the US currency, meaning a softer greenback can make the metal more attractive to buyers.The rebound comes after a difficult stretch for gold, which had fallen for three straight days before rallying late Thursday. The pressure has been tied to the nine-week Middle East conflict, which has kept the Strait of Hormuz effectively closed to shipping, with no progress in peace talks. US President Donald Trump said he is sticking with a naval blockade of Iranian ports, while Iran's supreme leader Mojtaba Khamenei vowed to retain the country's nuclear technologies and signaled Tehran would keep control of the strait. Oil held its second weekly gain, and the energy-supply shock has added to inflation risks, possibly making it more likely that central banks keep rates steady for longer or even move toward hikes. That could be a drag for non-yielding bullion, which has lost about 12% since the conflict began at the end of February.Still, the investment case for gold has not been knocked out. Citigroup NYSE:C analysts including Kenny Hu said selling pressure could remain strong in the very near term because of Middle East uncertainty, especially if higher gold prices come alongside another wave of equity-market correction. At the same time, they said gold could eventually outshine as a haven asset, supported by heightened geopolitical uncertainty and rising stagflation risks. The latest producer-funded World Gold Council data also showed that central banks added gold holdings in the first quarter at the fastest pace in more than a year, with the price slump encouraging buying that more than offset sales by a handful of institutions. Silver rose 0.9% to $74.44 an ounce, while platinum and palladium also advanced, leaving pr...

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