TLDR
- Gold rose above $4,700 an ounce, hitting a two-week high on Thursday
- Hope of a US-Iran peace deal pushed oil prices lower, easing inflation fears
- A weaker US dollar made gold cheaper for overseas buyers, boosting demand
- Iran is reviewing a 14-point US peace framework, with talks expected in Pakistan next week
- Silver also jumped over 5%, with platinum and palladium also rising
Gold is trading above $4,700 an ounce after rising for a third straight session on Thursday. The gains came as hopes grew that the US and Iran may be moving toward a peace deal that could reopen the Strait of Hormuz.
Spot gold was up 1.2% at $4,747.26 an ounce by mid-morning New York time. Gold futures for June climbed 1.3% to $4,753.71.
On Wednesday, gold jumped more than 3% — its biggest single-day gain since late March. That brought the metal to its highest level in two weeks.
Silver also had a strong run. It rose over 5% on Thursday after jumping 6.2% the day before. Platinum and palladium moved higher too.
Gold had fallen roughly 10% since the conflict with Iran began in late February. The closure of the Strait of Hormuz — a key waterway that handles about a fifth of the world’s oil — sent energy prices sharply higher, raising fears of prolonged inflation.
Higher inflation typically leads to higher interest rates. That’s bad for gold, which pays no interest. So when inflation fears ease, gold tends to benefit.
Peace Talks Ease Inflation Concerns
The US has put forward a one-page, 14-point framework to restart peace talks with Iran. According to the Wall Street Journal, discussions are expected to begin next week in Pakistan.
Iran’s Foreign Minister Abbas Araghchi met with his Pakistani counterpart to discuss the situation. They stressed the need for continued dialogue and diplomacy to avoid further escalation.
Iran was expected to send its response to the US proposal via Pakistan within two days of Wednesday. According to CNN, that response was expected by Thursday.
President Trump said at the White House on Wednesday that talks with Tehran had been “very good” over the last 24 hours. He suggested the US had “won” the war.
The US has also said it opened a passage through the Strait of Hormuz, according to US Central Command.
Dollar Weakens, Supporting Gold Prices
Oil prices fell again on Thursday, though they remain above pre-war levels. Lower oil prices reduced fears that inflation will stay high for a long time.
US Treasury yields also dropped as a result. This made gold more attractive to investors looking for a store of value.
The US dollar fell to pre-war levels. Since gold is priced in dollars, a weaker dollar makes it cheaper for buyers in other countries, which typically lifts demand.
The Bloomberg Dollar Spot Index edged down 0.2% on Thursday after falling 0.6% the day before.
ING analysts said a potential drop in energy prices “gives the Fed more room to cut rates, which is positive for gold.”
TD Securities strategist Ryan McKay said gold needs to hold above $4,700 to keep its upward momentum, with the next key level at $4,900.
Markets are now watching Friday’s US non-farm payrolls report for more clues on where interest rates may be headed.
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