Gold prices surged by more than 2% on Monday after officials from the United States and Iran stated that the two countries had reached an agreement to end their conflict. This development drove oil prices down and eased concerns over inflation and high-interest rates.
اضافة اعلان
Spot gold rose 2.5% to $4,322.87 per ounce by 03:12 GMT, hitting its highest level since June 9. U.S. gold futures for August delivery also climbed 2.5% to $4,344.80.
U.S. and Iranian officials said on Sunday that both nations agreed on a framework to end the war between them, lift the U.S. blockade imposed on Iran, and reopen the Strait of Hormuz.
Pakistani Prime Minister Shehbaz Sharif mentioned in a post on the X platform that the agreement will be officially signed on Friday in Switzerland.
Following the announcement of the deal, oil prices tumbled by more than 4%, and the dollar dropped to a 10-day low.
"The decline in oil prices and the drop in the dollar due to easing geopolitical risks and expectations of reopening the Strait of Hormuz are helping to cool inflation expectations," said Tim Waterer, chief market analyst at KCM Trade.
He added, "This combination provides the precious metal with the best support it has seen in the past few weeks, though its sustainability will depend on how well the peace agreement holds."
Gold prices had been under pressure since the outbreak of the U.S.-Israeli war on Iran in late February.
The effective closure of the Strait of Hormuz had triggered a sharp spike in global oil prices, fueling inflation worries and bolstering expectations that interest rates would remain higher for longer.
While gold is traditionally viewed as a hedge against inflation, it loses its appeal when interest rates rise because it yields no interest.
The CME Group's FedWatch Tool shows that traders now see a 48% chance that the Federal Reserve (the U.S. central bank) will hike interest rates by December following the peace deal, down from 69% last week.
As for other precious metals, spot silver jumped 3.6% to $70.39 per ounce, platinum climbed 3.3% to $1,773.70, and palladium gained 3.3% to $1,324.75.
Source: Reuters
