Fluctuations in Gold and Silver Prices Due to Tensions in the Arab World

SadaNews - Fluctuations in gold prices follow the conditional ceasefire agreement between Israel and Lebanon, in a potential step towards resolving the wider conflict in the Middle East that has disrupted global energy markets and increased inflation risks.

Gold prices were recorded near $4,474 per ounce, recovering part of the 1.2% decline from the previous session, as investors returned to the market. In a joint statement with the United States, Israel and Lebanon confirmed that their agreement is contingent on a "complete ceasefire" from Hezbollah, backed by Iran.

This agreement follows a renewal of fighting in the Middle East on Wednesday, which witnessed the most dangerous escalation since the ceasefire came into effect in April. Kuwait and Bahrain were affected by the exchange of fire, as strikes threatened to undermine peace negotiations between the U.S. and Iran.

Despite Washington and Tehran agreeing on a preliminary framework to extend the ceasefire and reopen the Strait of Hormuz, reaching a final agreement remains elusive. U.S. President Donald Trump stated that the vital waterway would be opened "immediately" once Iran signs a memorandum of understanding, but Tehran has rejected U.S. peace terms.

Trump's Statements on the Strait of Hormuz

The prolonged disruption of energy flows through the strait has led to rising oil prices and increased concerns about global inflation, making it more likely for central banks to maintain interest rates steady or even raise them, which poses a hurdle for non-yielding precious metals. Oil stabilized on Thursday after three days of gains.

Lorie Logan, President of the Federal Reserve Bank of Dallas, stated that officials may need to raise interest rates later this year to bring inflation back to the U.S. central bank's target of 2%.

"With ongoing concerns about inflation and expectations for rate hikes from the Federal Reserve by early 2027 at the latest, gold finds it difficult to achieve any serious recovery," according to analysts at TD Securities, Ryan McKay and Bart Melek, in a note.

Silver Prices

Silver prices were also recorded near $73.