Gold falls on increased risk appetite; US-Iran talks in focus

Gold prices fell after hitting a one-month high earlier in the session on Wednesday, as prospects of another round of peace talks between the U.S. and Iran lifted risk appetite, while rising oil prices added to higher inflation woes. Spot gold was down 0.6% at $4,811.19 per ounce, as of 0731 GMT, after hitting its highest since March 18 earlier. U.S. gold futures for June delivery fell 0.3% to $4,834.40. Talks to end the Iran war could resume in Pakistan over the next two days, U.S. President Donald Trump said on Tuesday, after the collapse of weekend negotiations. Gold prices are reacting to the Middle East headlines in the short term with hopes that the two countries will engage in talks, said Marex analyst Edward Meir. "If things fall apart again, we can revert to the pre-ceasefire pattern of lower gold, a stronger dollar, and lower equity prices." Bullion is up 1.3% so far this week. Asian stocks scaled a six-week peak on investor optimism that the Iran war may wind down soon. Brent oil prices rose amid uncertainty over crude supply from the key Middle East producing region, as the Strait of Hormuz remains largely shut. Higher crude prices feed into inflation by raising transportation and production costs. While gold is treated as a hedge against inflation, higher interest rates weigh on the non-yielding metal's demand. The U.S. military said late on Tuesday that American forces have completely halted economic trade going into and out of Iran by sea through a blockade of Iranian ports. In the U.S., traders see a 29% chance of a 25-basis-point rate cut this year, up from about 13% last week. Before the war, there were expectations of two cuts for 2026. "While gold and silver rallied strongly overnight, the broader signal was decisively risk-on rather than defensive positioning," analysts at OCBC said in a note. Among other metals, spot silver fell 0.3% to $79.31 per ounce, platinum gained 0.1% to $2,105.21, and palladium was steady at $1,586.63.