Gold (XAUUSD) is down by over 3% as investors assess the impact of potential peace talks between the U.S. and Iran in Islamabad as soon as this week. In addition, President Trump called off an attack on Iran’s energy infrastructure following “very good and productive conversations” between the two sides.
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New trading tool for QQQ bullsWhile stocks are rising, gold is viewed as a safe-haven asset and tends to benefit during periods of geopolitical uncertainty. “I think there’s concern in the market that the combination of economic, energy, and FX pressures could trigger a sea change in central bank gold flows and buying behavior,” said JPMorgan Head of Base and Precious Metals Strategy Greg Shearer.
Oil and Inflation Risks Benefit Gold, Says JPMorgan
Trump said on Monday that the U.S. and Iran had engaged in preliminary peace talks in recent days. Iran’s Foreign Ministry disputed his claim, but it acknowledged that intermediaries had conveyed messages between the two nations.
JPMorgan still maintains a bullish stance on the precious metal over the long term. Continued disruptions to oil supply and the ensuing risk of inflation are both factors that support the price of gold, while a rising U.S. dollar could weaken it.