Gold Rises on US-Iran Diplomacy Hopes

Gold climbed back above $4,800 an ounce on Thursday, recovering from the prior session’s losses as investors assessed the outlook for renewed negotiations and a potential long-term peace deal between the US and Iran that could help ease inflation pressures. Reports suggested Washington and Tehran are considering extending their two-week ceasefire to allow more time for talks, even as the Strait of Hormuz remains effectively closed under a dual blockade. Attention is now shifting to a possible second round of US-Iran discussions, expected to focus on reopening the strait and Iran’s nuclear enrichment program. Gold has drawn support in recent weeks as diplomatic progress in the Middle East reduced concerns over inflation and possible central bank tightening. However, the precious metal remains nearly 9% lower since the conflict began.

Gold traded around $4,820 per ounce on Wednesday, just below one-month highs, as investors weighed developments in US-Iran peace talks aimed at ending Middle East hostilities. According to the Associated Press, mediators have made progress in extending the ceasefire, with both sides agreeing in principle to prolong negotiations focused on Tehran’s nuclear program, the Strait of Hormuz, and war compensation. US President Donald Trump suggested a deal could be near, though uncertainty lingers after the US announced plans to deploy 10,000 more troops to the region soon. Meanwhile, the dollar remains near six-week lows, supporting bullion. Markets have also tempered expectations for tighter monetary policy, with the Federal Reserve adopting a cautious stance as it assesses inflation risks. Gold, typically an inflation hedge, has fallen 10% since the Iran conflict began, as higher interest rates curb demand for the non-yielding asset.

Gold traded above $4,800 an ounce on Wednesday after rising about 2% in the previous session, supported by hopes that the US and Iran can strike a deal to end the conflict, easing fears of an energy-led inflation shock. Washington and Tehran are reportedly working to schedule a second round of peace talks in the coming days after last weekend’s negotiations collapsed. The US is continuing its naval blockade of Iranian oil exports in the Strait of Hormuz, while Iran is considering a temporary suspension of shipments through the route to help advance a potential agreement. Meanwhile, crude oil retreated below $90 per barrel and the dollar index slipped to a six-week low, lending further support to gold. Markets have also dialed back hawkish expectations for monetary policy, with the Federal Reserve adopting a wait-and-see stance as it evaluates inflation risks.