Gold rises as Trump postpones Iran attack

Today’s headlines

What’s happening: Gold prices traded higher this morning as investors monitored the developments around the US-Iran conflict.

What happened: The yellow metal rose after US President Donald Trump put a hold on attacking Iran, saying the decision was at request of Gulf allies.

Weakness in the US dollar also lent support to gold prices this morning.

Why it matters: US President Donald Trump said the planned strike on Iran, which was scheduled for today, has been postponed at the request of Qatar, Saudi Arabia and the UAE.

Trump added that “serious negotiations are now taking place,” sparking speculations of progress in peace talks between the US and Iran.

Gold had been under pressure since the tensions between the US and Iran started, as higher crude oil prices raised inflation concerns, triggering speculations of central banks hiking interest rates.

Surging inflation in the US has also resulted in investors scaling back speculations of interest rate cuts by the Federal Reserve this year.

Weakness in the US dollar lent some support to gold prices, as a softer greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 99.07 this morning.

Spot price for gold rose slightly to $4,566.35 an ounce this morning, after recording gains in the previous session.

In other metals trading, spot price for silver declined 0.5% to $77.2535 an ounce and platinum prices fell 0.2% to $1,982.66, while palladium prices dipped 0.9% to $1,412.21.

What to watch: Investors will continue monitoring news on talks between the US and Iran.

Minutes from the latest FOMC meeting and US PMI readings, due to be released this week, will remain in focus. The S&P Global US manufacturing PMI, which came in at 54.5 in April, is expected to decline to 54 in May. Analysts expect the S&P Global US services PMI to remain at 51 in May, unchanged from the previous month.

The markets today

Japan’s stocks in focus today ahead of some major economic reports this week

Context: Equity markets in Japan traded higher this morning as investors digested the latest GDP data.

Details: Data released this morning showed Japan’s economy grew at an annualised rate of 2.1% in the first quarter, accelerating from a 0.8% expansion in the fourth quarter. The figure also topped market estimates of 1.7% growth.

This marked the fastest annualised growth in six quarters, driven by a significant surge in private consumption along with a strong contribution from net trade.

Japan’s GDP expanded 0.5% on a quarterly basis, up from 0.2% growth in the previous quarter, and surpassing market expectations of 0.4%.

Investors also monitored the latest developments in the Middle East conflict, after US President Donald Trump called off a planned military strike on Iran.

Japan’s Nikkei 225 rose around 0.1% to 60,884.29 this morning, while the TOPIX surged 0.8% to 3,857.50.

What to watch: Data on Reuters Tankan Index (0400 UAE Time) will be released by Japan on Wednesday. The Reuters Tankan index for Japanese manufacturers, which declined to 7.0 in April from 18.0 in the previous month, is expected to rise to a reading of 8.0 in May.

Data on balance of trade, S&P Global manufacturing PMI and S&P Global Services PMI from Japan, due to be released on Thursday, will also remain in focus.

Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.26%, 1.49%, 0.44% and 0.54%, respectively.

The news shaping the markets

A Russian drone hit a Chinese-owned vessel approaching a Ukraine port days before President Vladimir Putin heads to meet President Xi Jinping. The news sent the USD/RUB pair higher in forex trading this morning.

New Zealand’s electronic card transactions declined 1.3% in April, following a 0.7% gain in the previous month, exerting pressure on the NZD/USD forex pair.

Chile’s economy shrank by 0.5% year-over-year in the first quarter. The reading missing market estimates of 0.1% growth sent the USD/CLP pair higher in forex trading this morning.

Italy’s trade surplus came in mostly stable at €4.7 billion in March versus the year-ago month. However, the reading coming in short of market estimates of €5.2 billion exerted pressure on the EUR/USD forex pair.

Thailand’s economy expanded by 0.7% in the first quarter, easing from the previous month’s 1.9% growth, which sent the USD/THB pair higher in forex trading this morning.

What else to watch today

Spain’s balance of trade (1200 UAE Time), UK’s labour productivity (1230 UAE Time), Eurozone’s balance of trade (1300 UAE Time), US ADP employment change (1615 UAE Time), Redbook index (1655 UAE Time) and pending home sales (1800 UAE Time) as well as Canada’s inflation rate (1630 UAE Time), new housing price index (1630 UAE Time) and building permits (1630 UAE Time).