After America and Iran reached a peace agreement.. gold consolidates its gains and rises by more than 2%

Gold prices rose by more than two percent today, after American and Iranian officials announced that they had reached a preliminary agreement to end the war between them, which pushed oil prices to decline and eased concerns about inflation and the continued rise in interest rates.

Gold rose in instant transactions by 2.5 percent to reach $4,322.87 per ounce by 03:12 GMT, recording its highest level since June 9, continuing its gains for the third session in a row. US gold futures for August delivery also rose by 2.5 percent to reach $4,344.80.

Yesterday, officials from the United States and Iran said that they had agreed on a framework for ending the war, lifting the American blockade on Iran, and reopening the Strait of Hormuz. Pakistani Prime Minister Shehbaz Sharif confirmed in a post on the X platform that the agreement will be officially signed on Friday in Switzerland.

Against the backdrop of these developments, the US dollar fell to its lowest level in 10 days, making the precious metal priced in the US currency less expensive for holders of other currencies, while oil prices fell by more than 4 percent.

Tim Waterer, chief market analyst at KCM Trade, said: “The decline in oil prices and the decline in the dollar, resulting from the decline in geopolitical risks and the expected reopening of the Strait of Hormuz, are contributing to calming inflation expectations.”

He added: “This combination gives the precious metal the best positive boost it has received in weeks, although the continuity of this rise will depend on the sustainability of the peace agreement.”

Gold prices have fallen by about 20 percent since the outbreak of the US-Israeli war against Iran in late February. The effective closure of the Strait of Hormuz led to a sharp jump in global oil prices, stoking fears of inflation and increasing expectations that interest rates would remain high for a longer period. It is known that gold loses its appeal in a high interest rate environment because it is an asset that does not generate returns.

Following the announcement of the peace agreement, markets reduced their expectations for the Federal Reserve to raise interest rates next December to 48 percent, down from 69 percent last week, according to the CME Group’s “Feed Watch” tool.

Markets are now awaiting the monetary policy decision and statements issued by the Federal Reserve next Wednesday, which will be the first under the presidency of its new Chairman, Kevin Warsh, amid widespread expectations to keep interest rates unchanged.

OCBC Bank said in a note: “Concerns about currency decline, financial risks, and the ongoing geopolitical divide are all factors that continue to support demand for gold in the long term.” The decline in inflation driven by energy prices may help these factors regain their momentum again.”

In terms of other precious metals, silver rose in spot transactions by 3.6 percent to record $70.39 per ounce, platinum rose by 3.3 percent to $1,773.70, while palladium jumped by 3.3 percent to reach $1,324.75.

Gold prices rose by more than 2 percent on Monday, after US and Iranian officials announced that they had reached a preliminary agreement to end the war between them, which pushed oil prices down and eased concerns about inflation and continued high interest rates.

Gold rose in instant transactions by 2.5 percent to reach $4,322.87 per ounce by 03:12 GMT, recording its highest level since June 9, continuing its gains for the third session in a row. US gold futures for August delivery also rose by 2.5 percent to reach $4,344.80.