Gold maintained its position on Tuesday as investors assessed mixed signals regarding potential U.S.-Iran discussions while anticipating a series of U.S. employment reports for insights into the Federal Reserve’s trajectory on interest rates. Spot gold remained unchanged at $4,055.39 per ounce, as of 0042. U.S. gold futures increased by 0.6%, reaching a price of $4,055.10. U.S. President Donald Trump stated that discussions with Iran were in progress, cautioning that it represented a “last chance” for Tehran to secure a favourable agreement to conclude the five-month-old conflict.

However, Iran refuted the claim, asserting that no negotiations were occurring or scheduled. The conflict has led to a rise in energy costs and heightened inflation concerns, potentially prompting central banks to raise interest rates in an effort to manage price pressures effectively. While gold is traditionally viewed as a safeguard against inflation, elevated interest rates generally exert downward pressure on the metal, as it does not provide any yield. Traders are currently assigning a 65% probability to the likelihood of the Fed raising rates in September, following a divided decision by the Fed to keep rates unchanged at its most recent policy meeting.

Federal Reserve Bank of New York President John Williams expressed his optimism regarding the gradual easing of inflation pressures; however, he indicated that should these pressures persist, the U.S. central bank would not hesitate to implement rate hikes. The week is filled with numerous reports concerning the labour market, including U.S. job opening data expected later today, the ADP employment report scheduled for Wednesday, and the nonfarm payrolls figures set to be released on Friday.

Data on Monday indicated that U.S. manufacturing activity rose to its highest level in over four years in July, although the ongoing conflict in the Middle East is exerting pressure on supply chains and maintaining elevated input costs. Elsewhere, South Korea’s central bank will buy gold from local producers to diversify its sources of supply and increase its holdings of the precious metal, it said on Monday. Spot silver increased by 0.1% to $58.24 per ounce, platinum experienced a rise of 0.4% to $1,633.88, whereas palladium saw a decline of 0.2% to $1,262.00.