Gold Erases Losses on Middle East Ceasefire Hopes

Gold prices edged up to $4,470 an ounce on Thursday, as markets weighed hopes of progress in Middle East peace talks against persistent inflation worries. According to Axios, US and Iranian negotiators have reached a 60-day memorandum of understanding to extend a ceasefire and begin talks on Iran’s nuclear program, though final approval from President Trump is still pending. Tensions remain elevated, with continued exchanges between the US and Iran, while Israel has also resumed strikes on Hezbollah targets in Lebanon despite a fragile ceasefire. At the same time, gold remains close to a two-month low as higher energy prices fuel inflation concerns and reduce expectations for near-term rate cuts. Fed officials maintained a cautious tone, with Lisa Cook backing steady rates for now but leaving room for hikes if inflation accelerates, while John Williams warned inflation could rise toward 4% headline and 3% core in the near term.

Gold fell below $4,400 an ounce on Thursday, hitting a two-month low as reports of fresh US strikes on an Iranian military site clouded the outlook for peace negotiations, keeping inflationary and interest rate concerns in focus. Key disagreements also remain unresolved, including Tehran’s insistence on maintaining control of the Strait of Hormuz and preserving its nuclear program. President Donald Trump reiterated that the US would not agree to what he called a bad deal and rejected easing sanctions on Iran despite Tehran’s demands for financial relief and an end to attacks. Even if both sides move closer to a deal, elevated energy prices are still expected to fuel inflationary pressures and encourage central banks to keep interest rates higher for longer, rather than proceed with the rate cuts. Gold is currently down more than 15% since the conflict began.

Gold prices fell about 2% to around $4,400 an ounce on Wednesday, the lowest level in nearly two months, as declining oil prices helped ease fears of another inflation spike. Developments in the Middle East remained in focus, with traders growing increasingly hopeful that the US and Iran could soon reach an agreement to end the conflict and reopen the Strait of Hormuz. The optimism persisted despite mixed signals from both Washington and Tehran, as well as fresh strikes earlier this week. Iranian state television reported details of an unofficial draft memorandum between Tehran and Washington, under which the two countries would restore traffic flows through the Strait of Hormuz. However, the White House later denied the report. Gold stands nearly 15% below the levels seen at the start of the conflict, as concerns over an energy-driven inflation shock reinforced expectations that major central banks may keep monetary policy tighter for longer.