Gold Steady; Traders Weigh Iran Talks Against Weak Dollar

Gold held near its recent range on Tuesday. Traders said the focus was on US-Iran peace talks that could cut into safe-haven demand, though a softer dollar and steady central bank buying kept a floor under prices.

The talks in Oman mark the first direct US-Iran negotiations since 2022. A successful outcome would remove a geopolitical risk premium that has supported gold since late 2024, several traders said. The dollar index slipped 0.3% against a basket of major peers, making gold cheaper for buyers using other currencies.

Central banks in Asia and Eastern Europe have been consistent buyers. Data from the World Gold Council showed official sector purchases running at roughly 1,000 tonnes annualised through the first quarter. That demand has absorbed selling from exchange-traded funds, which have seen mild outflows this year.

For gold miners, the flat price leaves margins intact but offers no near-term catalyst. Shares of producers tracked the metal, moving little on the session. The sector's broader outlook hinges on whether the Federal Reserve cuts rates later this year, which would lower the opportunity cost of holding gold. Traders said a rate cut would also weaken the dollar further, providing a second tailwind.

Crude oil fell on the same peace talk hopes, with crude oil dropping more than 2% at one point. The divergence between gold and crude illustrates how the same catalyst cuts different ways. Peace talks reduce supply disruption risk for oil, hitting prices, while gold's safe-haven premium erodes only if the talks produce a tangible result. A failed negotiation would reverse both moves, traders said.

The metal's next short-term driver is any headline from the talks. Gold has traded in a $40 range for the past two weeks, and traders said a breakout would need either a clear deal or a breakdown with no further talks scheduled. No date has been set for a follow-up session.