Gold prices rose on Thursday as investors returned to the precious metal following the announcement of a temporary peace agreement between the United States and Iran, although gains remained limited by expectations that the Federal Reserve could still tighten monetary policy later this year.
Spot gold climbed 0.3% to $4,269.42 an ounce by 05:46 ET (09:46 GMT), while gold futures were down 2.1% at $4,288.72 an ounce.
The recovery followed a sharp 1.7% decline in the previous session, when stronger Treasury yields and a firmer U.S. dollar weighed heavily on bullion markets.
U.S.-Iran Accord Boosts Market Confidence
Investor sentiment improved after Washington and Tehran agreed to a 14-point memorandum designed to reduce tensions and reopen key energy trade routes.
The agreement launches a 60-day negotiation period and includes provisions allowing unrestricted passage through the Strait of Hormuz, one of the world’s most important oil and gas shipping corridors.
Traffic through the waterway is expected to return to full capacity within 30 days under the framework of the deal.
The prospect of a smoother flow of energy supplies helped ease concerns over a prolonged disruption to global oil markets.
Gold Retains Its Defensive Appeal
Despite the improvement in geopolitical conditions, many investors continued to view gold as an important portfolio hedge.
While the agreement has reduced fears of an energy-driven inflation shock, uncertainty surrounding the broader economic outlook has supported demand for safe-haven assets.
The metal benefited from this balancing act, attracting buyers even as risk sentiment improved.
Fed Signals Keep Pressure on Precious Metals
Gold’s advance was restrained after the Federal Reserve maintained interest rates at 3.50%-3.75% and indicated that further policy tightening remains a possibility.
Updated forecasts revealed that nine of the central bank’s 19 policymakers now expect at least one rate increase in 2026.
The projections marked a notable shift from earlier expectations and reinforced the market’s view that inflation remains a key concern for officials.
Warsh Emphasizes Price Stability
Federal Reserve Chair Kevin Warsh adopted a firm tone during his first policy meeting at the helm of the central bank.
Warsh stressed the Fed’s commitment to restoring price stability and supported revised inflation forecasts that pointed to a slower path toward lower consumer price growth.
Those signals prompted investors to reduce expectations for future rate cuts and provided support for the U.S. dollar.
Dollar Strength Caps Further Gains
A stronger dollar tends to weigh on gold by increasing its cost for international buyers.
At the same time, higher interest rates raise the opportunity cost of holding non-interest-bearing assets such as bullion.
As a result, while geopolitical developments helped gold recover from recent losses, monetary policy concerns continued to limit the metal’s upside potential.
Leave a Reply