Gold prices rose on Thursday, buoyed by growing optimism that the United States and Iran are moving toward negotiations after days of deadlock. Traders also assessed the U.S. Federal Reserve's interest rate path after the Justice Department dropped an investigation into Chair Jerome Powell.
Bullion climbed above US$4,700 an ounce as bond yields declined. The move came after U.S. Attorney Jeanine Pirro announced she was ending her probe into building-renovation cost overruns at the Fed, removing a source of uncertainty for the central bank.
Iran Talks Progress
Iran's Foreign Minister Abbas Araghchi is scheduled to arrive in Islamabad on Friday, with expectations of a second round of peace talks between the U.S. and Iran, according to Pakistani officials familiar with the matter. Iranian media reported that Araghchi is on a "regional tour" that will also include visits to Oman and Russia.
U.S. President Donald Trump will send special envoy Steve Witkoff and Jared Kushner to Pakistan for talks with Araghchi this weekend, CNN reported, citing two administration officials.
Fed Investigation Dropped
The termination of the controversial investigation into Fed renovation cost overruns potentially clears the path for Kevin Warsh, Trump's pick to be the next Fed leader. Warsh is known for his hawkish stance on inflation. Investors do not expect him to deliver aggressive rate cuts urged by Trump, but rather pursue a measured approach with gradual moves to lower borrowing costs.
Market Impact
Higher energy prices since the war began in late February have stoked concerns about persistently high price pressures, which may prompt the Federal Reserve and other central banks to keep interest rates elevated for longer or even raise them further. That is negative for non-yielding bullion.
Bullion has traded in a tight range in recent weeks as traders navigate a steady stream of shifting headlines from the Middle East conflict. It remains down about 10% since the war began in late February, as investors initially sold the precious metal to raise cash.
Other Developments
The State Oil Fund of Azerbaijan, one of the largest sovereign gold buyers, reported selling nearly 22 tons of the precious metal in the first quarter, worth more than US$3 billion at current prices. Rapid price gains meant gold's share of the fund's portfolio was straining its target upper threshold of 35%, necessitating a rebalancing.
Spot gold rose 0.7% to US$4,729.07 an ounce as of 11:57 a.m. in New York. Silver gained 1% to US$76.44 an ounce. Platinum fell, while palladium advanced. The Bloomberg Dollar Spot Index dropped 0.2%.
