Gold prices rebounded on Tuesday after hitting their lowest level in nearly a week in the previous session, as falling oil prices—driven by hopes for renewed peace talks between the United States and Iran—eased inflation concerns.
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Spot gold rose by 0.6% to $4,768.19 per ounce as of 02:37 GMT, after dropping to its lowest level since April 7 in the prior session. U.S. gold futures for June delivery also increased by 0.5% to $4,790.70.
Oil prices fell below $100 per barrel as expectations of potential dialogue between Washington and Tehran reduced supply concerns linked to the U.S. blockade of the Strait of Hormuz.
Higher oil prices typically drive inflation by increasing transportation and production costs. While inflation often boosts gold’s appeal as a hedge, rising interest rates tend to reduce demand for the non-yielding metal.
Ilya Spivak, head of global macro at Tastylive, said markets appear optimistic that there is still time to reach an agreement between the United States and Iran.
Reuters reported that negotiations between Washington and Tehran are ongoing, while U.S. Vice President J.D. Vance stated in an interview that Washington expects Iran to make progress toward reopening the Strait of Hormuz.
At the same time, President Donald Trump said the U.S. military began enforcing a blockade on Iranian ports on Monday, while Tehran warned it could retaliate by targeting ports in neighboring Gulf countries following the failure of talks in Islamabad earlier in the week.
Meanwhile, the U.S. dollar hovered near a more than one-month low, making gold priced in dollars cheaper for holders of other currencies.
Traders now see a 29% probability of a 25-basis-point U.S. interest rate cut this year, up from about 12% last week. Before the war, markets had expected two rate cuts this year.
Among other precious metals, spot silver rose 0.9% to $76.27 per ounce, platinum edged up 0.1% to $2,071.75, and palladium gained 0.2% to $1,576.23.
Reuters
