Gold prices climbed on Monday as markets reacted to signs that the US and Iran are moving closer to a deal that could reopen the Strait of Hormuz, easing some of the inflation pressure tied to energy markets, reported Bloomberg.
Bullion rose to around US$4,575 an ounce, recovering last week’s losses. The move came after US officials said negotiations on the wording of the agreement were still ongoing and could take several days to finalise. US President Donald Trump also said he would not “rush” into any deal.
US Secretary of State Marco Rubio had earlier suggested there could be “some good news” on the Strait of Hormuz soon, as talks between Washington and Tehran continued.
Even so, the response from markets was fairly muted. Justin Lin, analyst at Global X ETFs in Sydney, said investors have become cautious about reacting to political headlines, pointing to a pattern where earlier announcements from Donald Trump did not lead to lasting policy changes. He added that clearer evidence of cooperation from Iran would likely be needed before gold makes a more sustained move higher or inflation expectations shift meaningfully.
Gold is still down about 13% since the conflict escalated in late February, with traders increasingly pricing in the likelihood of US interest rate hikes as higher energy costs fuel inflation concerns.
Markets are now almost fully pricing in a Federal Reserve rate increase by December, which typically weighs on gold because it doesn’t offer yield. Attention is also turning to incoming Fed chair Kevin Warsh, with investors watching for signals on how he plans to approach inflation and broader economic policy.
In other metals, spot gold was up 1.5% at US$4,575.30 an ounce in Singapore trading. Silver gained about 4% to US$78.53, while platinum and palladium also moved higher. The Bloomberg Dollar Spot Index slipped 0.2%, reflecting a slightly weaker US dollar.
