Gold Stabilizes After Surge Supported by Hopes for an Agreement with Iran

SadaNews - Gold prices stabilized after their biggest daily increase since the end of March, as hopes for an agreement between the United States and Iran led to a drop in oil prices and eased inflation concerns.

The precious metal traded at around $4696 per ounce, after gaining 3% on Wednesday. The declining energy prices affected bond yields, while the dollar traded at pre-war levels, which is positive for gold priced in dollars.

Iran is evaluating a new proposal from the United States to end the conflict that has lasted nearly 10 weeks, according to a person familiar with the matter, as China joined the global pressure to end the war.

U.S. President Donald Trump has indicated on several occasions during the conflict that a deal was close, but it never materialized. He stated on social media that the United States would end its military campaign and lift its blockade on the Strait of Hormuz, "assuming Iran agrees to the terms, which may be a big assumption."

Fragile Optimism for a Potential Agreement Supports Metals

TD Securities strategists, including Ryan McKay, wrote in a note that "news about a potential peace agreement puts precious metals and the base metals complex in a strong position this morning."

They added: "We caution that this news remains very fragile against a reversal, as U.S. and Iranian demands appear unchanged compared to previous proposals."

While the markets priced in hope, the presidents of the Federal Reserve Bank of Chicago, Austan Goolsbee, and the Federal Reserve Bank of St. Louis, Alberto Mousalem, struck a cautious tone, highlighting that inflation is running above the 2% target.

Gold has declined by about 11% since the outbreak of the conflict in late February, as the closure of Hormuz and the resulting energy price shock have reduced the likelihood of interest rate cuts.

Silver Price

Silver prices were also recorded near $77 per ounce.