Gold prices moved higher on Thursday, recovering from losses in the previous session as investors welcomed an interim peace agreement between the United States and Iran.
However, the Federal Reserve’s warning that interest rates could rise later this year limited the precious metal’s gains.
Spot Gold Rebounds Above $4,300
Spot gold climbed 1.1% to $4,304.89 per ounce by 21:20 ET, or 01:20 GMT.
In contrast, U.S. gold futures declined 1.3% to $4,325.97 per ounce.
Gold had fallen 1.7% during Wednesday’s session as the U.S. dollar strengthened and Treasury yields rose following the Federal Reserve’s latest policy announcement.
US-Iran Peace Agreement Supports Gold
Optimism surrounding the interim U.S.-Iran peace deal helped gold prices recover.
The agreement is expected to reduce tensions across the Middle East and support the reopening of important energy export routes.
The 14-point memorandum begins a 60-day negotiation period. During that time, Iran will allow ships to pass through the Strait of Hormuz without paying tolls.
The agreement also calls for maritime traffic through the strategically important waterway to return to full capacity within 30 days.
Oil Supply Fears Begin to Ease
The deal reduced concerns that the conflict could cause a prolonged disruption to global oil supplies.
Lower fears of an energy shock also eased concerns about oil-driven inflation.
This supported demand for gold as a hedge against economic uncertainty and possible inflationary pressures.
Federal Reserve Limits Gold’s Advance
Gold’s gains remained limited after the Federal Reserve kept interest rates unchanged within a range of 3.50% to 3.75%.
Although the decision was widely expected, policymakers indicated that tighter monetary policy could still be required later in 2026.
Updated projections showed that nine of the Fed’s 19 officials expect at least one interest rate increase this year.
The forecasts represented a significant shift from earlier expectations that the central bank could lower borrowing costs.
Kevin Warsh Maintains Firm Inflation Stance
Kevin Warsh chaired his first Federal Reserve policy meeting and maintained a firm position on inflation.
The new Fed chair emphasised the central bank’s commitment to restoring price stability.
The Fed also raised its inflation forecasts. As a result, investors reduced their expectations for future interest rate cuts.
Stronger Dollar Pressures Gold Prices
The more hawkish Fed outlook pushed the U.S. dollar higher.
The U.S. Dollar Index gained 0.2% on Thursday after rising 0.6% in the previous session.
A stronger dollar usually makes gold more expensive for buyers using other currencies. At the same time, higher interest rates increase the opportunity cost of holding gold because the metal does not generate interest.
Silver and Platinum Prices Rise
Other precious metals also recorded gains.
Silver prices increased 1.3% to $68.78 per ounce, while platinum advanced 1.1% to $1,759.89 per ounce.
Copper markets produced mixed results. Benchmark copper futures on the London Metal Exchange fell 0.9% to $13,713.33 per tonne.
Meanwhile, U.S. copper futures rose 0.5% to $6.39 per pound.
