Gold prices edged lower in Asian trading on Wednesday after reaching a one-month high, as investors turned their attention to the prospects of renewed negotiations between the United States and Iran ahead of a ceasefire deadline next week.
The precious metal had surged in the previous session, supported by improved risk sentiment after U.S. officials signalled the possibility of further ceasefire discussions with Iran. Softer-than-expected U.S. producer inflation data also helped ease concerns over the interest rate outlook.
Spot gold declined 0.6% to $4,815.17 per ounce, while gold futures slipped 0.3% to $4,838.40/oz by 02:23 ET (06:23 GMT).
Other precious metals also moved lower. Spot silver dropped 0.4% to $79.2715 per ounce, while platinum was little changed at $2,107.21 per ounce.
Gold supported by soft inflation data and weaker dollar
Gold reached a one-month high on Tuesday following a softer-than-anticipated reading of U.S. producer price index (PPI) inflation for March.
The broader metals complex also posted gains as the U.S. dollar weakened in response to the data.
The PPI figures echoed trends seen in consumer price index (CPI) data, where headline inflation was pushed higher by rising energy costs, but underlying price pressures remained relatively contained.
The softer inflation readings weighed on the dollar and increased expectations that the Federal Reserve may have room to cut interest rates later this year.
Adding to this outlook, former Federal Reserve Chair and U.S. Treasury Secretary Janey Yellen said she sees the possibility of one rate cut in 2026.
Lower interest rates tend to support non-yielding assets like gold by reducing the attractiveness of fixed-income investments such as government bonds.
Geopolitics in focus as Iran blockade intensifies
Markets turned cautious again as oil prices rebounded on Wednesday after the U.S. military confirmed it had fully enforced a naval blockade on Iran, a move seen as an attempt to pressure Tehran into reaching a peace agreement.
U.S. President Donald Trump said he expects further ceasefire talks within the next two days and suggested that an end to the conflict could be close.
The ongoing war, now entering its seventh week, has weighed on gold prices, as concerns over inflationary pressures linked to higher energy costs have offset some of the metal’s traditional safe-haven appeal.
At the same time, reports indicate that both Washington and Tehran remain open to continued dialogue, particularly ahead of the fragile ceasefire set to expire next week. As of Wednesday morning, the truce appeared to be holding.