Gold rallied on Wednesday as easing geopolitical tensions pushed Treasury yields down.
The prospect of diplomatic progress helped ease immediate inflation concerns, driving yields lower across the curve and improving gold’s appeal.
At the same time, expectations around US monetary policy shifted to a certain extent. Markets scaled back their conviction in a prolonged hold in interest rates, reflecting increased uncertainty around the economic outlook and potentially lower oil prices.
Persistent tensions in Eastern Europe continue to underpin safe-haven demand, while ongoing central bank purchases, with China extending its buying streak for a 17th consecutive month, highlight sustained demand for gold.
Looking ahead, gold’s trajectory will depend on the outcome of US-Iran negotiations and their impact on inflation expectations and yields. Markets will also closely monitor the Federal Reserve minutes for further clues on monetary policy direction, which could shape near-term momentum for bullion.
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