Gold prices climbed strongly in Asian trading on Wednesday, helped by a weaker U.S. dollar and lower oil prices after signs of reduced tensions in the Middle East eased immediate concerns over inflation.
Spot gold rose 2.3% to $4,663.85 an ounce by 02:51 ET (06:51 GMT), while June U.S. gold futures gained 1.7% to $4,647.31.
The precious metal had already posted gains of nearly 1% in the previous session.
Trump hints at Iran agreement and pauses Hormuz shipping initiative
U.S. President Donald Trump said Tuesday that Washington would temporarily halt its operation designed to restore commercial shipping traffic through the Strait of Hormuz, adding that negotiations with Iran appeared to be progressing.
The comments marked a shift back toward diplomacy after tensions intensified earlier in the week, when Trump’s “Project Freedom” effort to secure maritime access through the strait prompted a military reaction from Iran and sent oil prices sharply higher.
Gold, which is widely viewed as a safe-haven asset, had recently struggled as rising energy prices fueled inflation fears and reinforced expectations that interest rates could remain elevated for an extended period — a backdrop that tends to pressure non-yielding assets like bullion.
Lower crude prices help reduce inflation fears
Oil prices continued to decline during Asian hours following Trump’s remarks, easing worries about extended disruption to global energy supplies.
The decline in crude prices helped cool inflation expectations, offering support to gold markets even as geopolitical tensions showed signs of easing.
“A more durable truce would reduce energy-led inflation risks and lower the chance of further Federal Reserve tightening, which is supportive for non-yielding assets,” analysts at ING said in a research note.
Metals markets advance as dollar weakens
The U.S. dollar weakened against major global currencies amid rising optimism surrounding a possible agreement between the United States and Iran, making gold more affordable for holders of foreign currencies.
The U.S. Dollar Index traded 0.4% lower during Asian trading.
Among other precious metals, silver surged 4% to $75.73 an ounce, while platinum gained 2.2% to $2,000.40 an ounce.
Industrial metals also moved higher, with benchmark copper futures on the London Metal Exchange rising 1.5% to $13,289.78 per ton. U.S. copper futures added 1.7% to $6.09 per pound.
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