Oil and Gold See-Saw Again as US and Iran Deny Peace Talks

GOLD and SILVER rose sharply on Wednesday as No.1 precious metals consumer China returned from its May Day holidays and crude oil prices fell amid rumours of a peace-deal between the USA and Iran.

"It's more an American wish list than reality," tweeted Iranian politician Ebrahim Rezaei of the proposal reported by US news-site Axios.

"If they don't agree," tweeted US President Donald Trump, "the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before."

Brent crude briefly dipped below $100 per barrel for the first time in 7 sessions, losing as much as 15% from Monday's new 4-year highs before rallying to $102.

Gold in contrast hit 7-session highs, fixing above $4700 per Troy ounce at London's 3pm bullion-market auction and regaining more than $200 per ounce from Monday's 5-week spot market low.

"Since the start of the Iran war," says a note from the commodities team at German bank Commerzbank, "the oil price has arguably been the key determinant of gold price movements.

"A rising oil price implies higher inflation risks and thus an increasing likelihood of tighter monetary policy; the prospect of higher opportunity costs in turn weighs on the gold price."

Silver prices meantime rose Wednesday to 2-week highs above $77 per Troy ounce, while global stock markets jumped 1.4% on the MSCI World Index as surprise strength in US jobs data for April followed yesterday's better-than-expected US job openings numbers for March.

Closed since last Thursday for China's Labor Day Golden Week, trading in Shanghai silver saw prices jump 4.9% in Yuan terms, outpacing the 1.5% rally in Chinese gold prices.

Activity in China's services sector showed solid growth again last month, today's RatingDog PMI survey said.

US services growth was just below consensus forecasts for the ISM report, while activity across the Eurozone shrank for the first time in almost a year on S&P Global's PMI survey for German bank HCOB.

Silver's fellow industrial precious metals platinum and palladium also rose sharply on Wednesday, both touching 2-week Dollar highs at $2020 and $1561 respectively as the US currency fell 0.5% on the FX market.

Market expectations for the US Federal Reserve's end-2026 interest rate fell as oil prices retreated, slipping to 3.64% per annum after hitting close to 6-week highs on Monday at 3.70%.

"If you want sound policy decisions," says President Trump's nominee for Fed chairman Kevin Warsh, urging policymakers to stop sharing public recordings of all their internal discussions, "you have to create an environment in which sound policy fights can happen."