Gold Prices Rise as Oil Falls and Dollar Softens
Gold prices moved higher on Wednesday, supported by a decline in oil prices and a slightly weaker U.S. dollar. However, gains were limited as geopolitical tensions in the Middle East continued to weigh on market sentiment.
Spot gold climbed 1.8% to $4,553.22 per ounce by 10:26 ET (14:26 GMT), while U.S. gold futures surged 3.4% to $4,585.42 per ounce.
U.S.-Iran Peace Efforts Influence Market Sentiment
Reports suggest that U.S. President Donald Trump is seeking a diplomatic resolution to the conflict, with Washington presenting Iran with a 15-point peace proposal.
The plan reportedly includes demands for Iran to dismantle key nuclear facilities and reopen the Strait of Hormuz—a crucial global shipping route that has been largely closed in recent weeks, driving up energy prices and fueling inflation concerns worldwide.
Iran Pushes Back on Negotiation Prospects
Despite these efforts, Iran has indicated that current conditions are not suitable for truce negotiations. According to local reports, Tehran has set strict conditions, including the introduction of fees for vessels passing through the Strait of Hormuz.
An Iranian military spokesperson also dismissed the likelihood of a near-term resolution, suggesting that the U.S. is effectively “negotiating with itself.”
Conflicting Signals Keep Markets Volatile
Earlier this week, Trump announced a temporary five-day pause in strikes on Iranian energy infrastructure, citing productive discussions. However, Iranian officials rejected these claims, accusing the U.S. of exaggerating diplomatic progress to calm global markets.
Meanwhile, the conflict has continued, with fresh attacks targeting infrastructure in allied countries across the Persian Gulf. Some regional powers, including Saudi Arabia and the United Arab Emirates, are reportedly urging the U.S. to maintain pressure on Iran.
Oil Prices Decline but Remain Elevated
Even tentative signs of diplomacy were enough to push oil prices lower after recent spikes. Brent crude briefly fell below $100 per barrel, although it remains significantly above pre-conflict levels of around $70.
Lower oil prices tend to ease inflation expectations, which can reduce bond yields and weaken the dollar—factors that typically support gold prices.
Gold Outlook Tied to Dollar and Geopolitics
Analysts note that gold continues to benefit from softer energy prices and currency weakness. However, its near-term direction remains highly sensitive to geopolitical developments and expectations around central bank policy, particularly how the Federal Reserve responds to inflation risks.
