Gold Extends Decline on US-Iran Tensions

Gold slipped below $4,200 an ounce on Friday, wiping out gains from earlier in the week as hawkish signals from the US Federal Reserve outweighed the positive impact of the US-Iran peace agreement, which pushed oil prices lower and eased inflation concerns. On Wednesday, the Fed left interest rates unchanged as widely expected but indicated increasing support for interest rate hikes this year. Higher borrowing costs tend to reduce the appeal of non-yielding assets such as gold by increasing their opportunity cost. Meanwhile, investors welcomed signs of improving shipping conditions through the Strait of Hormuz after the US-Iran interim peace deal came into effect, ending a prolonged conflict that triggered the largest supply disruption on record. Still, traders remained cautious, with expectations that it could take months for shipping activity and energy flows to recover to levels seen before the conflict began in late February.

Gold rose above $4,300 an ounce on Thursday, recovering losses from the previous session after President Donald Trump signed an interim agreement to end the conflict with Iran and reopen the Strait of Hormuz. Reports indicated that the deal includes the swift reopening of the strait and the removal of sanctions on Iranian oil exports, while negotiations on nuclear issues and potential additional economic incentives for Iran are set to continue. Meanwhile, gold tumbled nearly 2% on Wednesday after the US Federal Reserve signaled increasing support for interest rate hikes this year. Fed Chair Kevin Warsh refrained from providing guidance on the next policy move but stressed that inflation has remained above the central bank’s 2% target for several years and reiterated the Fed’s commitment to restoring price stability.

Gold held below $4,300 per ounce on Thursday after falling nearly 2% in the previous session, as the US Federal Reserve signaled growing support for interest rate hikes this year. Half of FOMC members indicated that it may be necessary to raise rates this year, consistent with the expectations that core inflation will be higher than expected due to the impact of the war in the Middle East. Meanwhile, new Fed Chair Kevin Warsh declined to offer guidance on the next policy move but emphasized that inflation has remained above the central bank’s 2% target for several years and reaffirmed the Fed’s commitment to bringing price growth under control. On the geopolitical front, the US and Iran digitally signed their interim peace agreement, although it remains uncertain whether Iran has already begun steps to fully reopen the Strait of Hormuz.