Gold Prices Recover as Investors Assess U.S.-Iran Peace Deal
Gold prices moved higher on Thursday, recovering part of the losses recorded during the previous trading session.
Investors weighed optimism surrounding an interim peace agreement between the United States and Iran against the Federal Reserve’s warning that interest rates could rise later this year.
Spot gold gained approximately 0.2% to trade at $4,263.81 per ounce. However, U.S. gold futures fell around 2.2% to $4,283.95 per ounce.
Stronger Dollar Previously Pressured Gold
The precious metal had fallen by approximately 1.7% during Wednesday’s session.
A stronger U.S. dollar and rising Treasury yields placed pressure on bullion after the Federal Reserve delivered a more hawkish monetary policy outlook.
Higher bond yields can weaken demand for gold because the metal does not pay interest. At the same time, a stronger dollar makes gold more expensive for investors using other currencies.
U.S.-Iran Agreement Supports Market Sentiment
Gold received some support from the interim agreement between the United States and Iran.
The accord is expected to reduce tensions across the Middle East and create a path toward reopening important energy export routes.
Under the 14-point memorandum, the two countries will enter a 60-day negotiation period. During that time, Iran will allow vessels to travel through the Strait of Hormuz without paying transit fees.
The agreement also calls for shipping traffic through the strait to return to full capacity within 30 days.
Lower Oil Supply Risks Support Bullion Demand
The peace framework has reduced fears of an extended disruption to global oil supplies.
Investors had been concerned that continued conflict could restrict energy exports and push oil prices sharply higher. Such a development could increase inflation and create further uncertainty across financial markets.
The agreement has eased some of those concerns. It has also helped preserve demand for gold as a portfolio hedge against inflation and geopolitical instability.
Federal Reserve Limits Gold’s Advance
Despite improving geopolitical sentiment, gold’s gains remained limited following the Federal Reserve’s latest interest rate decision.
The central bank kept its benchmark rate unchanged within a range of 3.50% to 3.75% on Wednesday. However, 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.
This represented a significant shift from earlier market expectations, which had focused more heavily on the possibility of rate cuts.
Kevin Warsh Maintains Firm Position on Inflation
Kevin Warsh adopted a firm stance on inflation during his first policy meeting as Federal Reserve chair.
He emphasized that the central bank remains committed to restoring price stability. The Fed also raised its inflation forecasts, encouraging investors to reduce their expectations for future interest rate cuts.
The more hawkish outlook strengthened the U.S. dollar and increased pressure on gold prices.
Higher Rates Remain a Challenge for Gold
A stronger U.S. currency generally makes dollar-priced gold less affordable for international buyers.
Higher interest rates also increase the potential returns available from bonds, savings products and other interest-bearing investments. This raises the opportunity cost of holding gold, which does not generate income.
As a result, optimism surrounding the U.S.-Iran agreement helped gold recover, but concerns about tighter Federal Reserve policy prevented a stronger advance.
