Gold holds near $4,200 as traders weigh US-Iran deal prospects
NEW YORK (June 12) Gold (XAU/USD) consolidates on Friday as traders await further developments on a potential US-Iran peace deal. At the time of writing, XAU/USD is trading flat around $4,200 after recovering from a nearly seven-month low of $4,023 touched the previous day.
US President Donald Trump said on Thursday that he had canceled planned military strikes on Iran and claimed a peace agreement could be signed as soon as this weekend.
Trump's statement lifted market sentiment, with Gold rallying more than 3% and retracing part of the losses recorded earlier this week, as the US Dollar (USD) and Oil prices lost ground.
Iran's Foreign Ministry spokesperson said the framework text is "nearly finalized," according to the Islamic Republic News Agency (IRNA). A memorandum of understanding (MoU) between the US and Iran could be signed as soon as Sunday in Geneva, Bloomberg reported, citing senior officials.
However, Bullion is struggling to extend the previous day's gains amid uncertainty over Tehran's final approval. The upside also appears limited after this week's US inflation data reinforced expectations that the Federal Reserve (Fed) may need to keep interest rates higher for longer. Higher borrowing costs tend to weigh on non-yielding assets such as Gold.
The Consumer Price Index (CPI) climbed to 4.2% YoY in May from 3.8% YoY in April, marking its highest level since April 2023. The Producer Price Index (PPI) rose 6.5% YoY from 5.7%, its strongest pace since November 2022.
Hawkish Fed expectations and lingering doubts over whether a US-Iran agreement is imminent also help limit losses in the Greenback, leaving the precious metal on track for a second straight weekly loss.
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The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, trades around 99.75, holding modest intraday gains.
On the data front, the US economic calendar features the preliminary University of Michigan (UoM) Consumer Sentiment Index for June, due later in the American session.
