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(Bloomberg) — Gold was on track for a weekly loss as uncertainty persisted over progress in US-Iran talks to end the war that’s roiled global markets.
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Bullion fell below $4,450 an ounce on Friday, heading for a decline of around 2% in a week that saw the most serious clashes in the Middle East since a ceasefire was agreed in early April. On Thursday, Iran-backed Hezbollah rejected a US-brokered truce between Israel and Lebanon. That followed missile and drone attacks on Kuwait and Bahrain and an American strike on an oil tanker headed to Iran.
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Negotiations to end the wider conflict have stalled after appearing to near a resolution last week. US President Donald Trump said Thursday that peace talks were in the “final” stages after Iranian Foreign Minister Abbas Araghchi had earlier stated “no tangible progress has been achieved.”
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Now in its fourth month, the war has disrupted energy flows via the Strait of Hormuz, driven oil prices higher and raised concerns around global inflation. This makes central banks more likely to keep interest rates steady or raise them — a headwind for precious metals, which don’t pay interest.
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The perception that the standoff around Hormuz has moved further from resolution has increased the chance of an energy shock, and that “means tighter money, and this is a drag on gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery. Bullion is trading below key technical levels on the daily and 4-hour charts, suggesting the trend remains negative on those time frames, he said.
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Gold dropped sharply after the conflict began in late February and has traded in a narrow band in the last few weeks. On Friday, it was roughly 16% below the immediate pre-war level.
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Meanwhile, Federal Reserve Bank of San Francisco President Mary Daly said there’s too much uncertainty in the US economy to offer a view on where rates are headed. “We are prepared to respond either way, whatever the economy brings,” she said Thursday at the Bloomberg Tech conference.
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Spot gold fell 0.6% to $4,447.22 an ounce as of 10:03 a.m. in Singapore. Silver dropped 1.6% to $72.70 an ounce. Platinum and palladium also ticked lower. The Bloomberg Dollar Spot Index was flat after ending the previous session down 0.1%.
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