Gold prices slip as Trump sets two-week deadline over Iran-Israel conflict involvement
Gold prices slumped in early European trading on Friday morning, after US president Donald Trump set a two-week deadline to decide on whether the US would get directly involved in the Iran-Israel conflict.
In a briefing on Thursday, White House press secretary Karoline Leavitt read a message from Trump: "Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks."
This provided some relief to investors who were concerned about the potential for more immediate US involvement in the conflict.
Foreign ministers from UK, France and Germany are due to hold talks with Iranian officials in Geneva later on Friday to discuss Iran's nuclear programme.
Read more: FTSE 100 LIVE: Markets upbeat as UK and EU begin talks on Iran and Trump sets two week deadline
European stocks opened higher on Friday morning, on the back of Trump's two-week pause. Meanwhile, gold prices fell, signalling that investors had become less risk averse, as the precious metal is considered to act as a safe haven asset amid political and economic uncertainty.
Gold futures (GC=F) were down 1.3% at $3,363.10 an ounce at the time of writing, while the spot gold price fell 0.7% to $3,348.84 per ounce.
Neil Wilson, UK investor strategist at Saxo Markets, said: "Some temporary relief but not enough for anyone to hang their hats on properly as the situation remains way too unpredictable.
"Base case has started to shift in the direction of direct US involvement, which opens up a pandora's box of mess, but markets seem to be clinging to expectation that it all remains contained like it has in the past. The meeting today is material and could shift the needle — stay sharp."
Oil prices rose on Friday morning, trading at six-month highs, as investors assessed the latest developments around the Iran-Israel conflict.
Brent crude futures (BZ=F) advanced 0.4% to $77 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) climbed 0.7% to trade at $75.66 a barrel.
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Oil prices have surged over the past week, driven higher by concerns that the escalating conflict could lead to a disruption of global supply. There is particular focus on the Strait of Hormuz, off the coast of Iran, with around a fifth of global supplies passing through this channel.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: "For now, Iranian oil exports look to be unaffected with a report by Kpler suggesting tanker loadings had reached 2.2 million barrels per day so far this week, a five-week high.
"Price support looks firm on the demand side after US crude inventories plummeted by 10.1 million barrels compared to a forecasted fall of just 0.6 million."
The pound edged higher 0.1% against the dollar (GBPUSD=X) on Friday, trading at $1.3472 at the time of writing, helped by weakness in the greenback.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six currencies, fell 0.3% to 98.66.
The muted currency moves came as investors weighed the latest UK economic data releases.
Data published on Friday showed that UK government borrowing rose to £17.7bn in May, which was up from £17bn a year earlier.
Danni Hewson, head of financial analysis at AJ Bell (AJB.L), said: "May's borrowing came in at the highest ever for the month outside of the pandemic and will only add to speculation that the chancellor will have to announce more spending cuts or further tax increases at the next budget if she wants to meet her fiscal rules and pay for her spending plans."
Read more: Why bitcoin and gold are rallying as bond yields hit 30-year highs
Separate data, also released on Friday, showed that UK retail sales slumped 2.7% in May, which was much lower than the average forecast of a 0.5% fall in a Reuters poll.
"How much people are prepared to spend in the shops is a good indication of how confident consumers are feeling, or not, about their personal finances," said Hewson.
'It's interesting that on the day the latest the latest GfK survey suggests people were feeling a little less nervous in May after April's bill hikes, retail figures show sales in the same period were significantly down."
In other currency moves, the pound was little changed against the euro (GBPEUR=X), trading at €1.1704 at the time of writing.
More broadly, the UK's FTSE 100 (^FTSE) rose 0.5% to 8,838 points at the time of writing. For more details, on broader market movements check our live coverage here.
Read more:
Looming petrol price increase could hit fragile consumer confidence
Bank of England holds interest rates at 4.25% amid inflation fears
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