Gold prices rose 2% on Wednesday, buoyed by a weaker dollar, while softer oil prices eased fears
of inflation and higher-for-longer interest rates, amid hopes of
a U.S.-Iran peace deal.
Spot gold was up 2% at $4,647.09 per ounce, as of
0415 GMT. U.S. gold futures for June delivery rose 2% to
$4,658.
U.S. President Donald Trump said on Tuesday he would briefly
pause an operation to help escort ships through the Strait of
Hormuz, citing progress toward a comprehensive agreement with
Iran.
Gold gained as “oil prices retreated on reduction in
geopolitical risk premium, after the U.S. confirmed that the
ongoing fragile ceasefire between Iran is still intact, despite
the skirmish that was seen at the start of this week,” said
Kelvin Wong, a senior market analyst at OANDA.
The U.S. dollar and crude oil prices eased after Trump
indicated that a possible peace deal may be reached to end the
war with Iran.
U.S. Secretary of State Marco Rubio told reporters on
Tuesday that “operation Epic Fury is concluded,” adding that
“we’re not cheering for an additional situation to occur.”
“Any signs of re-escalation of tension between the two of
them, you will see gold prices seeing some form of
profit-taking, or for short-term speculators to unwind their
near-term net long position in gold,” Wong said.
A weaker U.S. currency makes dollar-priced metals cheaper
for holders of other currencies. ]USD/]
Elevated crude oil prices can stoke inflation, increasing
the likelihood of higher interest rates. While gold is
considered an inflation hedge, high interest rates make
yield-bearing assets more attractive, weighing on its appeal.
Investors await the U.S. non-farm payrolls release later
this week, which will test whether the economy remains resilient
enough to keep the Federal Reserve’s monetary policy on
hold.
Spot silver rose 3.4% to $75.62 per ounce, platinum
gained 2.4% to $1,999.95, and palladium was up
2.6% at $1,524.59.
(Reporting by Noel John in Bengaluru; Editing by Rashmi Aich
and Mrigank Dhaniwala)