Gold Maintains Gains Amid Anticipation of Opening the Strait of Hormuz This Week

SadaNews - Gold maintained its gains following U.S. President Donald Trump's declaration about the possibility of reopening the Strait of Hormuz on Friday, which is likely to alleviate the shock caused by energy and inflation in global markets.

The price of gold approached $4,326 an ounce, after rising by 2.2% in the previous session following the announcement of a temporary agreement between the United States and Iran to end the war and lift the maritime blockade imposed on the region. However, U.S. allies expressed caution regarding the speed of resuming energy and other goods flows through this strategic waterway.

Oil prices held steady as West Texas Intermediate was trading near $81 a barrel after nearly a 5% drop on Monday. Brent crude closed at around $83.

Gold is down 18% since the start of the war

The price of gold has decreased by about 18% since the United States and Israel launched strikes against Iran in late February. Gold has largely moved inversely to crude oil during the war, as rising energy prices have increased inflation and prompted central banks to keep interest rates high for longer, reducing the appeal of precious metals.

Nikki Shields, head of research and metal strategy at MKS PAMP trading and refining company, stated: "Both gold and silver prices are still below their true value compared to their reactions during past Middle Eastern conflicts." She added that "if the peace agreement holds, traders are expected to alleviate their sell-offs and return to viewing gold as a safe haven and an alternative to U.S. assets, including the dollar."

Precious metal traders are awaiting a series of central bank decisions this week, as the Federal Reserve, led by Kevin Warsh for the first time, is set to meet. Market expectations indicate a rate hike later this year.

Spot gold rose by 0.1% to $4,316.51 an ounce by 8 a.m. Singapore time. The price of silver decreased slightly by 0.1% to $69.87, after a 2.9% increase in the previous session. Platinum and palladium prices, along with the Bloomberg Dollar Spot Index, a measure of the U.S. currency's value, recorded a slight decline.

Silver Price

Silver prices were also recorded near $68 an ounce.