Gold Surges 2% as US-Iran Ceasefire Eases Inflation Fears

Gold prices climbed above $4,720 per ounce on Friday, reaching their highest level since April 22 and heading for a weekly gain of over 2%, as optimism surrounding a potential US-Iran peace agreement eased concerns that persistent inflation could keep interest rates elevated for longer. Despite a recent exchange of fire between the US and Iran, the most significant test of their month-long ceasefire, Iran stated that the situation had stabilized, while US President Donald Trump confirmed the ceasefire remained "in effect." Investors also processed the latest US jobs report, which revealed the economy added 115,000 jobs last month, surpassing expectations of 62,000 and indicating continued strength in the labor market. Since the war began in late February, gold has dropped more than 10%, pressured by rising oil prices that fueled inflation worries and clouded the outlook for interest rates.

Gold rose above $4,700 an ounce on Friday after experiencing sharp volatility in the previous session, even as renewed clashes between the US and Iran weakened hopes for a near-term peace agreement and reignited inflation concerns. US Central Command said American forces intercepted Iranian attacks and launched defensive strikes while guided missile destroyers moved through the Strait of Hormuz, while stressing that the military does not seek further escalation. Meanwhile, the Trump administration is awaiting Iran’s response to a proposal aimed at reopening Hormuz and ending the nearly 10-week conflict, with reports indicating that Tehran is expected to respond through Pakistan within the next two days. Still, gold remains down more than 10% since the conflict began, as the effective closure of the Strait of Hormuz triggered a historic surge in energy prices, fueling inflation fears and strengthening expectations that central banks may need to raise interest rates.

Gold climbed above $4,700 an ounce on Thursday, extending gains from the previous session as hopes for a US-Iran agreement triggered a sharp decline in oil prices and helped ease inflation worries. Reports indicated that the US had sent a one-page memorandum of understanding through Pakistani mediators aimed at formally ending the conflict and potentially allowing the gradual reopening of the Strait of Hormuz. Tehran is expected to respond in the coming days after confirming it was reviewing a US peace proposal, while more comprehensive negotiations over Iran’s nuclear program are reportedly expected later. Oil prices tumbled, easing concerns over inflationary pressures and reducing expectations that central banks would need to maintain restrictive policies for longer. Still, Federal Reserve Bank of Chicago President Austan Goolsbee warned that inflation has not continued to cool toward the US central bank’s 2% target and has instead accelerated since the outbreak of the war.