Bloomberg reports:
Gold (GC=F) extended gains after snapping a nine-day losing streak, after the US floated a proposal to end the war in the Middle East.
Bullion advanced as much as 2.8%, adding to a 1.6% jump in the previous session. The US drafted a 15-point plan intended to help bring the war with Iran to a close, while China has urged Tehran to engage in talks. Iran has yet to comment on the proposal.
… Since the war began more than three weeks ago, gold has moved largely in tandem with stocks and in an inverse relationship with crude. Elevated energy prices have raised the risk of inflation, leading investors to bet that the Federal Reserve and other central banks will keep interest rates unchanged, or hike them. That’s a headwind for non-yielding bullion.
Selloffs in global stocks and bonds have also forced investors to ditch their positions in gold to raise cash, further amplifying losses in gold.
A reduction in investor positioning, reduced buying from the Middle East and expectations of rate hikes all weighed on gold, Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note Wednesday. “With some of these factors likely to reverse in the coming months, we view the current setback in gold prices as an opportunity to add positions.”