Gold soars amid hopes for peace in the Middle East
In anticipation of a peace agreement between the United States and Iran, lower oil prices allayed concerns about inflation and higher-for-longer interest rates, while gold prices increased by more than 1% on Wednesday thanks to a declining dollar.
As of 02:25 GMT, spot gold was up 1.7% at $4,633.31 per ounce. June delivery U.S. gold futures increased 1.7% to $4,643.20.
Citing progress toward a comprehensive agreement with Iran, U.S. President Donald Trump announced on Tuesday that he will temporarily halt an operation to assist in escorting ships through the Strait of Hormuz.
According to Kelvin Wong, a senior market analyst at OANDA, gold increased as “oil prices retreated on reduction in geopolitical risk premium, after the U.S. confirmed that the ongoing fragile ceasefire between Iran is still intact, despite the skirmish that was seen at the start of this week.”
Following Trump’s suggestion that a peace agreement to end the conflict with Iran might be reached, the value of the US dollar and the price of crude oil decreased.
In the meantime, rising crude oil prices have the potential to fuel inflation and raise interest rates. Although gold is regarded as an inflation hedge, its attraction is diminished by high interest rates, which make yield-bearing assets more desirable.
On Tuesday, U.S. Secretary of State Marco Rubio informed reporters that “operation Epic Fury is concluded” and that “we’re …not cheering for an additional situation to occur.”If there are any indications that the two of them are becoming more tense, gold prices will either show some sort of profit-taking or short-term speculators would unwind their near-term net long position in gold, according to Wong.
Investors are now awaiting the release of the U.S. non-farm payrolls later this week, which will determine if the economy is still strong enough to support the Federal Reserve’s monetary policy or whether a weakening labour market will strengthen the case for rate reduction.
Platinum increased 1.7% to $1,986.25, spot silver increased 2.7% to $74.80 per ounce, and palladium increased 2.1% to