Gold price amid Donald Trump Middle East peace hopes

Gold prices rose on Wednesday following reports that Washington was working on a proposal to end the Middle East conflict, as falling oil prices eased concerns about persistent inflation.

Spot gold prices last increased by 2.56 percent to $4,588 per ounce. gold futures April delivery was last seen up over 4% at $4,597.7 per ounce.

US President Donald Trump said on Tuesday that the US and Iran were “in negotiations right now” and suggested Tehran was willing to strike a peace deal, although Iran denied it was in direct talks with Washington.

Speaking in the Oval Office, Trump said he had decided to back down on his latest threat to order attacks on Iran’s energy infrastructure “based on the fact that we negotiated.”

“They’re talking to us and they’re talking sense,” Trump said when asked to elaborate on his opinion.

After Trump’s statements, oil prices fell. While international benchmark Brent crude futures fell by approximately 6% to $98.31 per barrel, US West Texas Intermediate futures contracts fell by approximately 5% to $87.65 per barrel.

The dollar index, which measures the dollar’s strength against a range of currencies, fell 0.17% during Asian hours.

However, gold prices remain approximately 17% below their peak in late January.

Goldman Sachs stated that the recent decline in gold prices is largely in line with historical patterns and stated that high interest rate expectations and market volatility are the main factors behind this decline.

“We do not think this decline is surprising in light of our current pricing framework,” Daan Struyven, the bank’s co-head of global commodity research, said in a statement on Wednesday. He noted that rising rate expectations are weighing on investor demand, particularly through gold-backed ETFs that are “very rate sensitive.”

Periods of extreme market stress can also put pressure on bullion, as investors facing margin calls tend to sell gold among other assets, Struyven told media on a briefing call.

He also suggested that gold’s recent rally has surpassed fundamentals and that part of the correction reflects “some normalization.”

Still, Goldman maintained a structurally bullish view, forecasting that gold would reach $5,400 by the end of the year, supported by continued central bank buying as countries look to move into assets with “lower geopolitical and financial risks.”