Gold prices rose as the ceasefire between the U.S. and Iran continued
On Wednesday, gold prices rose by about 1%.
The market reacted to easing geopolitical tensions after U.S. President Donald Trump extended the ceasefire with Iran. This reduced pressure on gold sales and affected the dollar exchange rate, while simultaneously supporting riskier assets.
This was reported by Reuters.
Spot gold rose 0.9% to $4,756.10 per ounce as of 09:53 GMT. U.S. gold futures for June delivery rose 1.2% to $4,774.60.
“It seems that gold is now rising alongside virtually all risk assets. When other assets are under pressure, gold is liquidated (sold for cash—ed.), and when the pressure to liquidate eases, gold now has a chance to rise,” said Nitesh Shah, a commodities strategist at WisdomTree.
Stocks rose and the dollar fell, while oil prices hovered just below $100 per barrel amid the continued closure of the Strait of Hormuz.
It is noted that higher energy prices could fuel inflation. Although gold is traditionally considered a hedge against inflation, high interest rates make income-generating assets more attractive, which reduces demand for gold bullion, Reuters reports.
Meanwhile, U.S. Federal Reserve (Fed) Chair nominee Kevin Warsh stated on Tuesday that he had made no promises to Trump regarding interest rate cuts. In an effort to reassure U.S. senators considering his confirmation as head of the U.S. central bank, Warsh assured them that he would act independently of the White House while implementing sweeping reforms.
“We continue to expect further Fed rate cuts over the next 12 months<...> we maintain a constructive outlook on gold with a year-end target of $5,900 per ounce, driven by lower interest rates and a weaker U.S. dollar,” noted UBS analyst Giovanni Staunovo.
The spot price of silver rose 1.6% to $77.94 per ounce, platinum rose 1.6% to $2,069.94, and palladium rose 2.3% to $1,568.30.
Currently, global markets are seeing a moderate decline in the price of gold amid tense anticipation of the expiration of the ultimatum that U.S. President Donald Trump issued to Iran.
As a reminder, the Bank of France received nearly €13 billion after repatriating gold from the U.S.
Gold prices also fell below $4,500 per ounce for the first time since February.
