· Gold prices inched up on Thursday as investors preferred to stay put with the safe-haven metal even though the chances of an escalation in U.S.-Iran conflict waned after the two sides softened their stance.
Spot gold was up 0.1% at $1,557.34 per ounce by 0526 GMT. Prices hit their highest since March 2013 at $1,610.90 on Wednesday. U.S. gold futures were flat at $1,559.80.
· President Donald Trump said on Wednesday the United States did not necessarily have to respond militarily to Iran's attack on U.S. troops in Iraq, while Iranian Foreign Minister Mohammad Javad Zarif said the strikes "concluded" Tehran's response to the killing of commander Qassem Soleimani.
· Following the signal that both sides are looking to defuse the crisis "there is a degree of relief in markets," said Ilya Spivak, a senior currency strategist at DailyFx.
"We did not see an immediate escalation, although it would not be accurate to say that it cannot happen, there is that risk."
Gold, considered a safe investment in times of political and economic uncertainty, had risen as much as 2.4% on Wednesday and surpassed the key $1,600 level after Iran's retaliatory attacks.
Limiting gold's advance, Asian stocks erased their losses on the easing concerns of conflict.
· "... lingering geopolitical concerns around the Middle East are keeping a bid under gold," Stephen Innes, a market strategist at AxiTrader said in a note.
"Gold Bulls are still buying at the critical support level as back burner influences around trade and U.S. data uncertainty continues to argue for gold in the portfolio even as oil prices
sell-off, and U.S. equities are back near record highs."
Investors also took stock of data from China where consumer inflation steadied while factory-gate prices fell at a slower pace in December.
· Holdings of the world's largest gold-backed exchange-traded fund SPDR Gold Trust fell 1.05% to 886.81 tonnes on Wednesday.
· Gold's strong start to the year has put prices well above the precious metal's previous hard floor of $1,450 an ounce, said Scotiabank.
“$1450 was the new hard floor but gold is now firmly in a spot where the risk/reward in being directionally short is not favorable -- $1500 is increasingly looking like the new 2020 floor…,” wrote Scotiabank commodity strategist Nicky Shiels last week.
· The price of gold pulls back from a six-year high as US President Donald Trump addresses the nation, with the administration planning to respond to the Iran attacks with additional sanctions rather than military action.
It seems as though the Trump administration will continue to rely on tariffs and sanctions to carry out its agenda, and the Federal Reserve as well as the European Central Bank (ECB) may come under pressure to provide monetary support amid the weakening outlook for global growth. In turn, geopolitical risks paired with speculation for lower interest may keep gold prices afloat as market participants look for an alternative to fiat-currencies.
Keeping a close eye on the Fibonacci overlap around $1554 (100% expansion) to $1557 (38.2% expansion) to see if the former-resistance zone will offer support.
Need a close above $1591 (50% expansion) to look for a more meaningful run at the $1625 (61.8% expansion) to $1634 (78.6% retracement) area, with the next region of interest coming in around $1660 (161.8% expansion) to $1662 (261.8% expansion).
· Among other precious metals, palladium hit a record peak of $2,149.50 an ounce on sustained supply concerns, and was last up 1.8% to $2,142.51 an ounce.
Silver was flat at $18.08 per ounce, after hitting its highest since September at $18.85 on Wednesday, while platinum rose 0.2% to $955.61.
Reference: Reuters, FX Street, Kitco
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