Gold prices rise as Iran peace deal cheer outweighs Fed rate concerns

Gold prices rose on Thursday, recovering from the previous session’s losses as investors welcomed the signing of a U.S.-Iran interim peace agreement, while weighing the Federal Reserve’s signal for a rate hike later this year.

Spot gold rose 1.1% to $4,304.89 an ounce by 21:20 ET (01:20 GMT). However, U.S. Gold Futures slipped 1.3% to $4,325.97.

The yellow metal fell 1.7% in the previous session due to a stronger U.S. dollar and rising Treasury yields following the Fed’s latest policy decision.

Bullion found support from optimism surrounding the U.S.-Iran accord, which is expected to ease tensions in the Middle East and pave the way for the reopening of key energy export routes.

The 14-point memorandum begins a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz. The deal calls for traffic through the strait to be restored to its full capacity within 30 days.

The agreement has helped temper fears of a prolonged oil supply shock, reducing concerns about energy-driven inflation and supporting demand for bullion as a portfolio hedge.

However, gains were capped after the Federal Reserve held interest rates steady at 3.50%-3.75% on Wednesday and signaled that policymakers still see scope for tighter monetary policy later this year.

Updated projections showed that nine of 19 Fed officials expect at least one rate increase in 2026, a marked shift from expectations earlier this year.

In his first meeting as Fed chair, Kevin Warsh maintained a firm stance on inflation, emphasizing the central bank’s commitment to restoring price stability.

The Fed also raised its inflation forecasts, prompting investors to scale back expectations for rate cuts and boosting the dollar.

A stronger greenback typically makes dollar-denominated gold more expensive for overseas buyers, while higher interest rates increase the opportunity cost of holding non-yielding bullion.

The US Dollar Index edged 0.2% higher on Thursday, after jumping 0.6% in the previous session following the Fed announcement.

Among other precious metals, silver prices rose 1.3% to $68.78 per ounce, while platinum gained 1.1% to $1,759.89/oz.

Benchmark Copper Futures on the London Metal Exchange fell 0.9% to $13,713.33 a ton, while U.S.Copper Futures rose 0.5% to $6.39 a pound.

-Investing.com