Market reverses! Inflation concerns suppress positive outcomes of US-Iran talks, gold prices fall by nearly 2% to a low of $4115 per ounce.

Due to inflation concerns outweighing the optimism in the market over the progress of the US-Iran negotiations, the price of gold has fallen. Gold prices fell by 1.8% at one point, approaching $4115 per ounce, wiping out the slight gains from the previous trading day. The ongoing conflict in the Middle East over the past four months has pushed consumer prices higher, raising the possibility of major central banks raising interest rates, which is seen as negative for non-yielding precious metals. Chicago Fed President Austin Gulbis expressed concern about inflation on Monday and questioned whether all factors contributing to price increases are temporary. He stated, "We have been facing an inflation issue that is far above target levels and moving in the wrong direction." Inflation woes caused a decline in the price of gold. Furthermore, the hawkish tone of the new Fed Chair Kevin Wash has made investors uneasy, offsetting the positive impact of the temporary peace agreement signed between the US and Iran last week. Since the last Fed meeting, the US dollar has risen by over 1%, further weighing down gold prices priced in dollars. Deutsche Bank analyst Michael Hsueh stated in a research report, "The repricing of market expectations for Fed policy, combined with continued strong US macroeconomic data, are the main factors driving the lower gold price." The bank lowered its gold price forecast for the third quarter to $4300 per ounce, a decrease of over 20% from previous expectations, while also lowering its fourth quarter gold price forecast to $4800 per ounce. Deutsche Bank's somewhat pessimistic forecast aligns with the adjustment made by Goldman Sachs last week. Goldman Sachs lowered its year-end gold price forecast by $500 to $4900 per ounce, citing their judgment that the Fed will not cut rates this year. Since the outbreak of the Iran war at the end of February, gold prices have fallen by over one-fifth, and silver prices have fallen by about one-third. Traders will closely watch the US Personal Consumption Expenditures Price Index released on Thursday, with expectations that the index will accelerate. Analyst Ahmad Assiri from Pepperstone Group Ltd. stated, "I am inclined to believe that gold prices may sustain in the range of $4000 to $4300 per ounce until more data is released, either reshaping the monetary outlook or confirming a hawkish stance." On Monday, US Vice President Pence stated that talks with Tehran were "very, very good," indicating some progress in peace negotiations, providing some support for gold. Iranian officials also stated that there has been some progress in negotiations, although both sides still face numerous obstacles in implementing the memorandum of understanding signed last week. Rhona O'Connell, Head of Market Analysis for Europe, the Middle East, Africa, and Asia at StoneX Group, stated, "Gold and silver markets are still constrained by external macro factors, with prices lacking a clear one-way direction. While some fund flows have improved, the technical outlook for both metals is not optimistic." As of the time of writing, spot gold fell by 1.61% to $4124.10 per ounce; silver fell by 3.87% to $62.59 per ounce; platinum and palladium both fell by over 2%; the Bloomberg Dollar Spot Index rose by 0.1%.