Gold rose toward $4,600 on Monday, recovering after last week’s fall, as hopes of a US-Iran deal reduced worries about inflation and rate hikes.
The proposed agreement could reopen the Strait of Hormuz, reduce tensions, and restart nuclear talks, but Trump said the US blockade will stay until a final deal is signed.
Even with the rebound, gold is still down about 13% since the Middle East conflict began, as inflation fears support expectations of higher interest rates.
Markets are also watching the Federal Reserve, after Governor Christopher Waller suggested the Fed may be less likely to cut rates soon.
The proposed agreement could reopen the Strait of Hormuz, reduce tensions, and restart nuclear talks, but Trump said the US blockade will stay until a final deal is signed.
Even with the rebound, gold is still down about 13% since the Middle East conflict began, as inflation fears support expectations of higher interest rates.
Markets are also watching the Federal Reserve, after Governor Christopher Waller suggested the Fed may be less likely to cut rates soon.
Gold fell below $4,550 on Tuesday, giving back some earlier gains as Middle East tensions kept markets cautious.
The US reportedly struck targets in southern Iran, while Trump said Iran talks are going well but warned attacks could continue if talks fail.
Gold is down about 15% since the conflict started because investors fear higher energy prices could keep inflation high and interest rates elevated.
However, falling oil prices recently have reduced inflation concerns, limiting pressure on gold.
The US reportedly struck targets in southern Iran, while Trump said Iran talks are going well but warned attacks could continue if talks fail.
Gold is down about 15% since the conflict started because investors fear higher energy prices could keep inflation high and interest rates elevated.
However, falling oil prices recently have reduced inflation concerns, limiting pressure on gold.
Gold prices dropped to a 2-month low because of 3 main reasons :
U.S. attacks on Iran increased market uncertainty
Instead of buying gold, investors moved toward the U.S. Dollar.
Dollar became stronger
Gold is priced in dollars. When the dollar rises, gold becomes more expensive for buyers using other currencies, so demand for gold falls.
Oil prices rose → Inflation worries increased
Higher oil can mean higher inflation. This creates uncertainty about future U.S. interest rates. Markets think rates may stay high for longer, which is usually negative for gold (because gold pays no interest).
U.S. attacks on Iran increased market uncertainty
Instead of buying gold, investors moved toward the U.S. Dollar.
Dollar became stronger
Gold is priced in dollars. When the dollar rises, gold becomes more expensive for buyers using other currencies, so demand for gold falls.
Oil prices rose → Inflation worries increased
Higher oil can mean higher inflation. This creates uncertainty about future U.S. interest rates. Markets think rates may stay high for longer, which is usually negative for gold (because gold pays no interest).
Gold prices rose slightly on Friday as traders reacted to reports of a possible U.S.-Iran ceasefire deal.
Gold had dropped to $4,360 on Thursday and looked ready to fall more, but news of a ceasefire extension quickly pushed prices back up.
Now, markets are waiting for the final deal to be officially signed, possibly by Donald Trump, while also keeping an eye on inflation and U.S. interest rate concerns.
Gold had dropped to $4,360 on Thursday and looked ready to fall more, but news of a ceasefire extension quickly pushed prices back up.
Now, markets are waiting for the final deal to be officially signed, possibly by Donald Trump, while also keeping an eye on inflation and U.S. interest rate concerns.