Gold Prices Jump as Strait of Hormuz Reopens
Gold prices moved sharply higher on Friday after Iran confirmed that the Strait of Hormuz is open to commercial shipping during the ongoing ceasefire between Israel and Lebanon.
The development boosted hopes for de-escalation in the Middle East, while oil prices declined and U.S. equity futures extended gains.
Gold Gains Over 1% Amid Market Reaction
By 08:59 ET (09:59 GMT), spot gold rose 1.1% to $4,843.17 per ounce, while gold futures climbed 1.2% to $4,865.09 per ounce, reflecting increased demand for the precious metal.
Iran Confirms Shipping Access During Ceasefire
Iran’s Foreign Minister Abbas Araghchi announced that all commercial vessels are allowed to pass through the Strait of Hormuz for the duration of the ceasefire, signaling a temporary easing of geopolitical tensions.
U.S. President Donald Trump also acknowledged the announcement, highlighting the reopening of the key global shipping route.
Ceasefire and Diplomacy Support Market Sentiment
Trump previously announced a 10-day ceasefire between Israel and Lebanon, which appears to be holding. He also indicated that negotiations between the United States and Iran could resume soon.
According to Trump, both countries are “very close” to reaching an agreement, with Iran reportedly willing to refrain from developing nuclear weapons for more than 20 years in exchange for sanctions relief.
Proposed Deal and Ceasefire Extension
Reports suggest that Washington and Tehran are discussing a structured plan to end the conflict, including the potential release of $20 billion in frozen Iranian assets in return for limits on uranium enrichment.
Trump also signaled that the ceasefire could be extended if negotiations continue to progress.
Oil Prices Drop Following Hormuz Reopening
The reopening of the Strait of Hormuz brought relief to global energy markets. Brent crude fell below $90 per barrel after the announcement, reversing some of the sharp gains seen earlier in the conflict.
The disruption of this key shipping route had previously driven oil prices higher, as roughly 20% of the world’s oil supply flows through the strait.
Inflation Concerns and Interest Rate Expectations
The earlier surge in oil prices raised concerns about rising inflation worldwide, prompting speculation that central banks could tighten monetary policy.
Higher interest rates typically weigh on gold prices, as the metal does not offer yield. However, easing tensions have helped support gold in the near term.
Dollar Weakness Supports Gold Prices
The U.S. dollar weakened following the announcement, removing some pressure on gold. A softer dollar makes gold more attractive to international buyers, supporting demand.
Analysts Warn of Rangebound Markets Ahead
Despite recent volatility, analysts suggest that markets may lack a clear catalyst in the near term. As a result, assets such as currencies, bonds, and precious metals could trade within a more defined range.
