Gold prices held within the range that has contained trading for several weeks, with markets weighing geopolitical developments in the Middle East and the monetary policy outlook.
Conflicting rhetoric from Washington and Tehran fuelled uncertainty over any potential diplomatic progress, while talks between Iran and Oman continue.
Any positive impact on oil shipping through Hormuz could drive crude prices down, easing inflation concerns and pushing down bond yields, which could provide some relief for gold and help support a rebound. Conversely, a deterioration would push energy prices up and yields higher, placing pressure on the metal.
Attention this week is on the US labour market, as new data releases could influence monetary policy expectations. Softer figures could temper interest rate expectations, push down yields and boost gold prices, while resilient figures would strengthen the case for tighter policy. While the Federal Reserve is expected to raise interest rates at its next meeting, increasing odds of a hold could support gold.
A resurgence in ETF inflows could support the metal as well. Institutional investors in China are also showing interest in the asset after its multi-month correction and could add to the demand from central banks, potentially lifting gold.
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