Gold gives up four-week high on US-Iran talks assessment

Gold prices declined in European markets on Wednesday, giving up a four-week high recorded earlier in Asian trading due to the activity of correction and profit-taking operations, coinciding with pressure from the recovery of U.S. dollar levels in the foreign exchange market.

The levels of the American currency recovered while awaiting new developments regarding the talks between the United States and Iran, as intensive diplomatic efforts continue to push for a new round of peace negotiations following the stumbling of the previous round hosted by Pakistan.

Price overview

• Gold prices today: Gold metal prices fell by 1.0% to ($4,792.82), from the opening level of trading at ($4,841.30), and recorded a high of ($4,871.34), the highest since March 18.

• Upon price settlement on Tuesday, gold prices achieved an increase of 2.2%, in the first gain within the last three days, amid optimism regarding the U.S.-Iranian talks.

The U.S. Dollar

The dollar index rose on Wednesday by about 0.2%, holding above a six-week low of 97.97 points, on its way toward achieving its first gain in the last eight days, reflecting a recovery in the levels of the American currency against a basket of global currencies.

As we know, the rise in the levels of the American currency makes gold bullion priced in U.S. dollars less attractive to buyers holding other currencies.

Aside from buying operations from cheap levels, U.S. dollar levels are recovering as investors refrain from risk, awaiting the emergence of more positive indicators regarding the talks between the United States and Iran.

Diplomatic efforts

Diplomatic efforts continue, sponsored by Pakistan, Turkey, and some other countries, to bring viewpoints closer between the United States and Iran and to push toward engaging in a new round of negotiations, following the stumbling of the previous round held in the Pakistani capital, Islamabad, on Friday.

Media reports confirmed that a new round of negotiations between Washington and Tehran may be held in Islamabad during the coming days, with the Swiss capital, Geneva, proposed as a potential alternative for the second round of U.S.-Iranian negotiations.

U.S. President Donald Trump stated on Tuesday that talks to end the war with Iran may resume in Pakistan within the next two days, after the collapse of the previous round of negotiations, which prompted Washington to impose a blockade on Iranian ports.

U.S. interest rates

• According to the "FedWatch" tool of the CME Group: the pricing of the probabilities of keeping U.S. interest rates unchanged at the April meeting is currently stable at 99%, and the pricing of the probabilities of raising interest rates by about 25 basis points is at 1%.

• In order to re-price those probabilities, investors are closely following the release of more economic data from the United States.

Gold performance expectations

Edward Meir, an analyst at Marex, said: Gold prices are affected in the short term by news from the Middle East, amid hopes of the two countries entering into negotiations.

Meir added: If things worsen again, we may return to the pre-ceasefire pattern, where gold prices fell, the dollar rose, and stock prices fell.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased on Tuesday by about 2.29 metric tons, bringing the total up to 1,049.48 metric tons, rebounding from a total of 1,047.19 metric tons "which is the lowest level since March 30."