Gold Prices Rise as Investors Monitor US-Iran Peace Prospects
Gold prices moved slightly higher on Friday and remained on track for a weekly gain as investors weighed optimism surrounding a possible U.S.-Iran peace agreement against ongoing concerns over tensions in the Strait of Hormuz.
Spot gold climbed 0.7% to $4,721 per ounce, while U.S. gold futures gained 0.4% to $4,730.79.
The precious metal has risen more than 2% this week after rebounding from one-month lows recorded earlier in May.
Middle East Tensions Keep Markets on Edge
Investor attention remained focused on developments in the Middle East after U.S. and Iranian forces exchanged fire near the Strait of Hormuz on Thursday.
The incident marked the most significant violation so far of the month-old ceasefire agreement between the two sides.
Iran later stated that conditions in affected coastal regions had stabilized, while President Donald Trump said the ceasefire remained active.
Despite gold traditionally benefiting from geopolitical uncertainty, easing oil prices and reduced inflation concerns helped support broader market sentiment.
Lower Inflation Expectations Support Gold
Cooling oil prices have eased fears of persistent inflation and prolonged higher interest rates, factors that typically pressure gold prices.
Lower inflation expectations can support demand for bullion because gold becomes more attractive when investors anticipate fewer interest rate hikes from the Federal Reserve.
A modest decline in the U.S. dollar earlier in the week also provided additional support for gold prices.
The DXY traded slightly lower during Asian market hours after a volatile trading session.
Traders Await Key US Payrolls Report
Markets remained cautious ahead of the closely watched U.S. nonfarm payrolls report, which could significantly influence expectations for future Federal Reserve policy.
Economists expect the U.S. economy to have added approximately 65,000 jobs, while the unemployment rate is forecast to remain unchanged at 4.3%.
A weaker-than-expected labor market report could strengthen expectations for future Federal Reserve interest rate cuts, a scenario that would likely benefit non-yielding assets such as gold.
Silver and Copper Also Move Higher
Among other precious metals, silver prices jumped 2.8% to $80.59 per ounce, while platinum slipped 0.4% to $2,053.90 per ounce.
Meanwhile, copper prices also advanced. Benchmark copper futures on the London Metal Exchange rose 0.4%, while U.S. copper futures climbed 1.8%.
