Gold Holds Losses as US-Iran Impasse Keeps Inflation Risk High
Gold extended its two-day decline as stalled US-Iran peace talks kept inflation expectations elevated, pressuring real yields and the precious metal.
Gold prices remained under pressure on Wednesday, holding near session lows after a two-day decline, as the lack of progress in US-Iran peace talks kept inflation risk elevated. The precious metal has been caught between safe-haven demand and headwinds from higher real yields driven by sticky inflation expectations.
The impasse in negotiations between Washington and Tehran has sustained geopolitical uncertainty, but more importantly for rates markets, it has reinforced expectations that energy supply disruptions could keep inflation above central bank targets. This dynamic has pushed up breakeven inflation rates, lifting nominal yields faster than inflation expectations, thereby increasing real yields — a key headwind for non-yielding assets like gold. Traders can monitor real-time gold quotes and US Treasury yields on NowPrice to track these moves.
Looking ahead, market participants will focus on upcoming US inflation data, particularly the core PCE release, for confirmation of the inflation trajectory. Any signs of easing tensions or a diplomatic breakthrough could reverse the recent pressure on gold, while further stalemate may keep real yields elevated. The Federal Reserve's next policy decision will also be scrutinized for any shift in tone regarding inflation risks.