Gold holds steady near $4,550 as market eyes Middle East developments

• Gold price flat lines near $4,540 in Thursday’s early Asian session. 

• Trump said the US was in the “final stages” with Iran but also reiterated a pledge to restart attacks if a deal isn’t reached. 

• Fed Minutes showed more policymakers warned of a rate-hike scenario. 

Gold price (XAU/USD) trades on a flat note around $4,540 during the early Asian session on Thursday. Traders continue to assess the developments surrounding stalled US-Iran peace negotiations and threats to the Strait of Hormuz. The preliminary reading of the US Purchasing Managers Index (PMI) for May will be published later on Thursday. 

US President Donald Trump said on Wednesday that the US was in the “final stages” with Iran, sparking investor hopes that a deal was close. However, Trump also reiterated a pledge to restart attacks in the coming days if Iran doesn’t agree to his terms. 

"Any type of resolution to the war or opening of the Strait of Hormuz would be a positive for the gold market in so much as the expectation would be that interest rates would decline, and hence that would be opportunistic or helpful ‌to the gold market," said David Meger, director of metals trading at High Ridge Futures.

Minutes of the April Federal Open Market Committee (FOMC) meeting released on Wednesday showed that a majority of Federal Reserve (Fed) officials warned the central bank would likely need to consider raising interest rates if inflation continued to run persistently above their 2% target. 

The minutes highlighted the deepening concern among Fed officials about inflationary pressures driven by the Iran war. At the April meeting, the FOMC decided to hold its benchmark federal funds rate steady in a range of 3.5% to 3.75%.