Gold gains as Hormuz deal hopes boost precious metals

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Gold gains as Hormuz deal hopes

Highlights

Gold rose toward $4,580 an ounce on expectations of a U.S.-Iran deal.
Silver gained more than 3%, while platinum and palladium also strengthened.
A weaker dollar supported precious metals.
Talks on the Strait of Hormuz are continuing, but the deal has not yet been approved.

Precious metals recover

According to Bloomberg, spot gold rose by about 1.6% and approached $4,580 an ounce, offsetting a modest decline from last week. The metal was up 1.2% at $4,561.41 an ounce. Silver rose 3.1% to $77.86; platinum and palladium also traded higher. The Bloomberg Dollar Spot Index fell 0.2%, providing additional support for dollar-denominated commodities.

It is also reported that gains in gold and silver amid a weaker dollar and expectations of a possible deal between Washington and Tehran: in early European trading, New York gold futures were up 0.8%, while spot gold rose about 1.5%.

The deal is not finalized yet

Negotiations are continuing, and final wording could take several days to agree. U.S. officials told reporters that both sides still need to approve the details. President Donald Trump wrote on social media that he would not “rush” into an agreement.

Earlier, U.S. Secretary of State Marco Rubio said “good news” on the Strait of Hormuz could come in the coming hours. The route remains critical for the global oil and gas market, and its possible reopening reduces concerns about supply disruptions and energy prices.

Still, gold’s reaction remains cautious. Justin Lin, an analyst at Global X ETFs, said markets have already seen several Trump statements that did not lead to a concrete result. According to him, investors need more convincing signs of cooperation from Iran before gold’s rise can be seen as sustainable.

Fed rates remain the main barrier

Despite Monday’s gains, gold is still about 13% below the levels seen at the start of the conflict in late February. The reason is that the war with Iran initially pushed energy prices higher, strengthened inflation expectations and led traders to price in a more restrictive Fed policy.

For gold, this is critical: the metal does not generate interest income, so expectations of higher rates usually make it less attractive. Money markets now almost fully price in the likelihood of a Fed rate increase by December. The change in leadership at the central bank adds more uncertainty: investors will watch how new Fed Chair Kevin Warsh assesses inflation, the labor market and the impact of the Middle East shock.

Earlier, we reported that European stocks set to rise as U.S. and Iran move closer to deal.

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