Gold jumped about 3% on Wednesday and touched its highest price since April 27. Reuters reported that spot gold stood at $4,692.45 per ounce on Thursday morning, up 0.1%, as of 0436 GMT. U.S. gold futures for June delivery rose 0.2% to $4,701.
The trigger was Washington and Tehran. Investors were waiting on details of a possible U.S.-Iran peace deal, and by Thursday they were mostly sitting on their hands. President Donald Trump predicted a swift end to the war while Iran considered a U.S. proposal. Sources told Reuters the proposal would formally end the conflict but leave unresolved two key American demands: that Iran suspend its nuclear programme and reopen the Strait of Hormuz.
The mechanics
As ever, the detail that matters is what moves the metal underneath the headlines. The dollar hovered near a more than three-month low, which makes bullion cheaper for holders of other currencies. Benchmark 10-year Treasury yields had eased 0.6% so far that week, lowering the opportunity cost of holding gold, which pays no yield. Brent crude was down about 6% on the week as hopes grew that the war in the Middle East might end.
Oil matters here more than it seems. Elevated crude stokes inflation, which raises the likelihood of higher interest rates, and high rates weigh on gold even though it is usually treated as an inflation hedge. That is why gold has fallen more than 10% since the war began in late February.
“While a softer dollar and easing oil prices are providing some tailwinds, the yellow metal continues to face resistance from elevated real rates and caution over the practical implications of any deal that gets reached,” said Tim Waterer, chief market analyst at KCM Trade. He added: “Any meaningful peace deal between the US and Iran would likely act as a significant tailwind for gold.”
Other metals, and a later wobble
Spot silver rose 0.3% to $77.52 per ounce, platinum was down 0.4% at $2,054.95, and palladium gained 0.1% to $1,538.22. Investors also awaited the monthly U.S. employment report on Friday to see whether the economy is resilient enough to keep Federal Reserve policy on hold.
The deal hope proved shaky. By May 25, Business Recorder noted, Trump had said he told his representatives not to rush into any deal with Iran, after saying a day earlier that the two sides had “largely negotiated” a memorandum of understanding that would reopen the Strait of Hormuz. Spot gold still rose 1.4% to $4,570.88 that Monday, helped by a weaker dollar and lower oil.
Sources
- Gold rises on weaker dollar as investor weigh US-Iran peace deal prospects
- Gold gains as investors focus on US-Iran peace deal prospects | Dunya News
