Gold Holds Gains Amid Optimism Over a Peace Deal Between the U.S. and Iran
Gold prices continued to rise during Friday’s trading session for the second consecutive day, supported by growing optimism regarding the possibility of extending the ceasefire between the U.S. and Iran, as markets continue to await a formal agreement that could ease geopolitical tensions in the Middle East.
Despite the current gains, gold is on track to post its third consecutive monthly loss, amid ongoing concerns about U.S. inflation and higher interest rates for a longer period.
Gold Prices Rise Today
The price of gold rose 0.6% during Friday’s trading to reach $1,451 per ounce, after the precious metal managed a strong recovery following this week’s sell-off.
Gold had fallen during Thursday’s session to near $4,370 per ounce, hitting a two-month low, before prices rebounded unexpectedly following reports of an extension of the ceasefire between the United States and Iran.
This optimism appears to be continuing to support gold’s movements so far, as a wait-and-see attitude persists in global markets.
Markets Await Signing of U.S.-Iran Agreement
Reports indicate that Washington and Tehran are nearing an agreement to extend the ceasefire for 60 days, alongside the start of new negotiations regarding Iran’s nuclear program.
The proposals also include allowing unrestricted passage of commercial shipments through the Strait of Hormuz, which could help ease concerns regarding global oil and energy supplies.
However, caution continues to dominate the markets, especially following reports confirming that U.S. President Donald Trump has not yet formally approved the proposed final terms.
U.S. Vice President J.D. Vance also stated that it is still too early to determine whether the agreement will actually be reached or when it might be finalized.
Falling Oil Prices Support Gold Stability
On the other hand, oil futures prices fell by more than 1% during Friday’s trading and are on track to record their biggest weekly loss since early April.
This decline helped ease some concerns regarding rising global inflation caused by surging energy prices during the Iran conflict.
The drop in oil prices is a relatively positive factor for gold, as it reduces inflationary pressures that could push central banks to tighten monetary policy further.
U.S. inflation remains a concern for markets
Despite the recent decline in oil prices, markets continue to watch U.S. inflation data with caution, especially after U.S. inflation recorded its fastest pace of increase in three years during April.
This data reinforced analysts’ expectations that the U.S. Federal Reserve may keep interest rates high and unchanged until next year in an effort to control inflationary pressures.
Persistently high interest rates negatively impact gold, as the precious metal does not generate a financial return, reducing its appeal compared to other assets that offer fixed returns, such as bonds.
Gold Price Forecast for the Coming Period
Gold’s movements in the coming period remain linked to several key factors, most notably:
- Developments in the U.S.-Iran agreement
- The future of the ceasefire in the Middle East
- Global oil price trends
- Decisions by the U.S. Federal Reserve
- U.S. inflation data and interest rates
- Movements in the U.S. dollar
Analysts believe that gold may continue to fluctuate significantly in the coming period, as investors await any official announcement regarding a potential agreement between Washington and Tehran.
If negotiations are successful and oil prices continue to decline, inflationary pressures may gradually ease, while gold may once again benefit from expectations of future interest rate cuts.
