Gold (XAU/USD) traded flat around $4,455 during the early Asian session on Thursday, as market participants remained cautious due to ongoing uncertainties surrounding US-Iran peace negotiations and the impending release of the US Core Personal Consumption Expenditures (PCE) Price Index report later in the day [1]. US President Donald Trump stated on Wednesday that he would not be rushed into a deal with Iran, emphasizing that Iran's attempts to outlast him would not succeed and asserting that the Strait of Hormuz would remain 'open to everybody' under US oversight as part of the negotiations [1]. US Secretary of State Marco Rubio commented that the US would give talks with Iran 'every chance to succeed' and noted some progress in the discussions, while also indicating that alternative options remain if diplomacy fails [1].
The uncertainty over the US-Iran peace deal and the strategic importance of the Strait of Hormuz are seen as factors that could influence gold prices in the near term [1]. Meanwhile, traders are closely watching the upcoming US PCE inflation data, which is expected to provide insights into the US interest rate outlook for the year [1]. Market consensus anticipates the headline PCE Price Index to rise by 3.8% year-over-year in April, up from 3.5% in March, while the core PCE Price Index is projected to increase by 3.3% year-over-year, compared to 3.2% previously [1].
Any indication of higher-than-expected inflation in the US could reinforce expectations for an interest rate hike by the Federal Reserve this year, which may impact gold's attractiveness as an investment, given that gold does not yield interest and tends to be less appealing in a high-rate environment [1]. Gold is often sought as a safe-haven asset during periods of geopolitical uncertainty, but its performance is also sensitive to shifts in monetary policy expectations [1].
CONCLUSION
Gold prices remained steady as investors awaited clarity on both US-Iran negotiations and key US inflation data. The outcome of the PCE report and ongoing geopolitical developments are likely to determine gold's near-term direction, with higher inflation potentially pressuring the metal if rate hike expectations rise.