Gold steady with Middle East turmoil, US jobs data in focus

Gold held steady on Tuesday as investors monitored conflicting signals on possible U.S.-Iran talks and looked ahead to a slew of U.S. jobs reports for clues on the Federal Reserve’s interest-rate path.

FUNDAMENTALS

Spot gold was steady at $4,055.39 per ounce, as of 0042 GMT. U.S. gold futures rose 0.6% to $4,055.10. U.S. President Donald Trump said that talks with ‌Iran were ⁠under way, ⁠warning that it was a “last chance” for Tehran to sign a good deal to end the five-month-old war, but Iran denied that any negotiations were being held or planned.

The conflict has driven up energy costs and stoked inflation fears, which could prompt central banks to increase interest rates to keep price pressures in check. While gold is traditionally seen as an inflation hedge, ⁠higher rates ‌tend to weigh on the metal since it yields no interest.

Traders currently price in a 65% chance that the Fed will ⁠raise rates in September, after a divided Fed left rates unchanged at its last policy meeting.

Federal Reserve Bank of New York President John Williams said he remained optimistic that inflation pressures are on track to ease gradually, but if they don’t the U.S. central bank will not hesitate to respond with rate hikes. The week is packed with several reports on the labour market, including U.S. job opening ‌data due later in the day, the ADP employment report on Wednesday and Friday’s nonfarm payrolls figures. Data on Monday showed that U.S. manufacturing activity increased to the ⁠highest level in more than four years in July, though the conflict in the Middle East is straining supply chains and keeping input costs elevated. Elsewhere, South Korea’s central bank will buy gold from local producers to diversify its sources of supply and increase its holdings of the precious metal, it said on Monday.

Spot silver gained 0.1% to $58.24 per ounce, platinum rose 0.4% to $1,633.88, while palladium fell 0.2% to $1,262.00.