Gold Climbs on US-Iran Peace Agreement

Gold climbed toward $4,300 an ounce on Monday, advancing for a third consecutive session after the US and Iran reached a peace agreement that would reopen the Strait of Hormuz. Oil prices declined to a two-month low following the announcement, easing concerns over rising inflation and the prospect of interest rate hikes that have weighed on bullion. The agreement is set to be signed in Switzerland on June 19 and reportedly includes the lifting of blockades, sanctions relief for Iran, and the dismantling of Tehran’s nuclear program. Meanwhile, the US Federal Reserve will hold its first policy meeting this week under new chair Kevin Warsh and is widely expected to keep interest rates unchanged. The Reserve Bank of Australia is also expected to leave policy steady, while the Bank of Japan is likely to raise rates in support of its currency.

Gold traded around $4,200 per ounce on Friday, as oil prices fell on growing optimism for a US-Iran peace deal. However, bullion remained on track for a second consecutive weekly decline due to expectations of higher interest rates. US President Donald Trump suggested a deal could be reached as early as this weekend, though Tehran stated no final decision had been made. Since the Iran conflict began, gold has faced pressure amid concerns that surging energy costs could drive inflation higher, reinforcing expectations that central banks will maintain elevated interest rates. Supporting this view, the European Central Bank raised interest rates on Thursday for the first time since 2023 and upwardly revised its inflation forecasts for 2026 and 2027. Additionally, US producer prices climbed 6.5% year-over-year in May, underscoring the inflationary impact of the Middle East energy shock and strengthening expectations of a Federal Reserve rate hike this year.

Gold eased below $4,200 an ounce on Friday but held most of the gains from the previous session, as growing optimism over an imminent peace deal between the US and Iran eased concerns about persistent inflation and potential interest rate hikes. President Donald Trump said a deal with Iran could be reached as early as this weekend after postponing planned attacks and warning that the US could target the country's oil infrastructure. Iran's semi-official Fars news agency also reported that Tehran was likely to accept the agreement, although no final text has been approved. Meanwhile, the ECB raised interest rates on Thursday for the first time since 2023 and lifted its inflation forecasts for 2026 and 2027. Data also showed US producer prices climbed 6.5% year-on-year in May, highlighting the inflationary effects of the Middle East energy shock and reinforcing expectations of a Federal Reserve rate increase this year.