Gold prices rise supported by the signing of a temporary peace agreement between the US and Iran

SadaNews - The price of gold rose, supported by the signing of a temporary peace agreement between the United States and Iran, despite the Federal Reserve indicating a rate hike later this year.

Gold traded near $4,315 per ounce after dropping 1.7% in the previous session.

US and Iranian officials electronically signed the peace agreement on Wednesday evening, but it is still unclear whether the Strait of Hormuz has been reopened.

The agreement is expected to ease the severity of the global energy crisis that has led to rising inflation and expectations of interest rate hikes. However, uncertainty still surrounds how quickly fuel prices will decline and when shipping traffic through the strait will return to pre-war levels.

Tightening monetary policy by October

The Federal Reserve kept interest rates unchanged on Wednesday, emphasizing that it will achieve price stability, and removed from its statement any reference to additional adjustments to interest rates. Traders now expect a tightening of monetary policy by October. High-interest rates pose a barrier to precious metals that do not yield interest.

Regarding gold, Ryan McKay, senior commodity strategist at TD Securities, noted in a memo that expectations of interest rate hikes were "already anticipated" even before the Federal Reserve's recent decision. He added: "The overall trend remains bearish for gold... indicating that a notable shift in the Federal Reserve's expectations may be necessary to change the fundamental trends in the precious metals market."

The spot gold price rose 0.1% to $4,297.83 per ounce by 8:13 AM Singapore time. Silver increased by 1.2% to $68.75, after a decline of 3% in the previous session. Platinum and palladium prices also rose. The Bloomberg Dollar Spot Index fell 0.1%, after rising 0.7% in the previous session.

Silver price

Silver prices were recorded near $69 per ounce.