Gold prices remained relatively stable in trading today, as investors adopted a cautious stance awaiting the outcome of the new round of nuclear talks between the United States and Iran, being held in Geneva. These negotiations are seen as pivotal and could determine the course of geopolitical tensions in the Middle East, directly impacting the performance of safe-haven assets, most notably gold.
Historical background and context of negotiations
These negotiations trace their roots back to the 2015 nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), which Iran concluded with the P5+1 group of nations. However, in 2018, the United States unilaterally withdrew from the agreement and reimposed crippling economic sanctions on Tehran. Since then, international parties have been attempting to revive the agreement through intensive diplomatic efforts, aiming to bring Washington back into the deal in exchange for Iran's full compliance with its terms. The current round of talks is particularly significant, as the market closely watches for any signs of a breakthrough that could ease tensions.
Impact of negotiations on global markets
Gold is considered an accurate gauge of global uncertainty. During times of political tension and conflict, demand for it as a safe haven increases, driving its price higher. Conversely, any diplomatic breakthrough, such as reaching an agreement on the Iranian nuclear program, would reduce geopolitical risks, thus diminishing gold's appeal and prompting investors to seek higher-risk assets like stocks. Spot gold rose slightly by 0.4% to $5,185 an ounce, while U.S. gold futures fell by 0.6% to $5,194.
Expert analysis and predictions
In this context, Razan Hilal, a market analyst at FOREX.com, stated in a research note: “Both gold and silver are attempting to break through key resistance levels, but have failed to hold onto their gains so far this week, increasing the risk of a pullback if a geopolitical agreement is reached in the near term.” For his part, Peter Grant, senior metals strategist at Zaner Metals, indicated that he still expects gold prices to rise to higher levels, but did not rule out some short-term price corrections depending on the developments in the negotiations.
Performance of other precious metals
The impact wasn't limited to gold; it extended to other precious metals as well. Silver fell by 1% to $88 an ounce, platinum declined by 1.6% to $2,249, and palladium also lost 1.6% of its value, settling at $1,766. These metals, in addition to their role as investment assets, are affected by industrial demand, which can also shift with the changing global economic landscape and its political stability.
