Gold Continues Gains as Dollar Falls and Iran Talks Progress

SadaNews - Gold continued its gains after U.S. President Donald Trump indicated progress towards a final agreement with Iran, easing inflationary pressures and pushing the dollar lower.

The precious metal rose to around $4,651 an ounce, after increasing by 0.8% on Tuesday. The dollar index fell by 0.2%, making gold cheaper for many buyers.

Trump said in a social media post that there has been "substantial progress" with Iran, and that he would temporarily halt the U.S.-led effort to help stranded ships leave the Strait of Hormuz, to see if the agreement could be finalized.

Ongoing Ceasefire and Underlying Tensions in Hormuz

U.S. Defense Secretary Pete Hegseth stated that the ceasefire, which began less than a month ago, is still in effect, while Secretary of State Marco Rubio said offensive operations have ended, as Washington shifts its focus to protecting navigation in the strait. For his part, Iranian Foreign Minister Abbas Araghchi stated that talks are "making progress."

Despite the U.S. downplaying the likelihood of returning to active war, reports of a cargo ship being hit by an unknown projectile a day after clashes in the Strait of Hormuz indicate that tensions remain latent.

Short-Term Pressures from Interest Rate Expectations

With the path toward an agreement to reopen the strait unclear, gold remains under short-term pressure as inflation fears rise, bolstering expectations of interest rate hikes by the Federal Reserve, which typically puts pressure on non-yielding assets like gold.

Bond traders are increasing their bets that the next move by the U.S. central bank may be an interest rate hike rather than a cut. Gold has dropped more than 12% since the outbreak of war in late February.

Expectations for an interest rate hike are rising ahead of the U.S. jobs report, which may show stability in the labor market, allowing inflation risks to overshadow investor concerns.

Paradox in Investor Positioning

Nikki Shields, Head of Research and Precious Metals Strategy at MKS PAMP, stated that precious metals are entering summer with a "structural paradox in investment positioning," where the nominal value of money invested in gold remains high, but positioning in terms of contracts and quantities remains low.

She added: "The medium-term bullish fundamentals linked to currency devaluation, supply chain breakdowns, and monetary system disruption remain, but the short-term path to record new highs requires the influx of public institutional capital to fill a gap caused by seasonal factors and fatigue among individual investors."

Silver Price

Silver prices were also recorded near $75 an ounce.