Gold Prices Rebound on Decline in Oil Amid Optimism Over Iran Diplomatic Efforts

Gold Prices Rebound Amid Hopes for Iran War Breakthrough

Gold inched up on Friday, reversing earlier losses of more than 1%, on hopes for a breakthrough to end the Iran war after Tehran submitted a new proposal for negotiations, easing some inflation concerns.

Spot gold was up 0.1% to $4,627.63 per ounce at 1:50 p.m. ET (1750 GMT) after falling to as low as $4,559.48 earlier in the session. It was still on track for a weekly loss of 1.7%. US gold futures for June delivery were up 0.4% to $4,649.60.

The dollar eased against its peers, making greenback-priced bullion cheaper for buyers holding other currencies. Iran has submitted its latest proposal for negotiations with the United States, Iranian state media and a Pakistani official said. This development helped gold recover from early morning losses.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The U.S. Federal Reserve kept interest rates unchanged this week and struck a hawkish tone that saw markets abandon expectations for a rate cut this year. Rising costs could prompt central banks to keep interest rates higher for longer, weighing on non-yielding assets such as gold as investors turn to alternatives like Treasury yields.

Despite the metal's traditional role as a hedge against geopolitical uncertainty, bullion prices have fallen since the start of the Iran conflict in late February.

Comparison of Gold Prices

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Among other precious metals, spot silver prices rose 3% to $75.91 per ounce. The long-term outlook for silver remains supported by a sixth consecutive annual market deficit, shrinking above-ground inventories, and firm demand from solar and private investors. Platinum was up 0.3% at $1,992.05, and palladium added 0.6% to $1,532.79.

Oil prices dropped on the news, though they remained on track for weekly gains, continuing to fuel concerns about a global economic slowdown and surging inflation as fuel prices climb.