Gold Prices Soar as Iran Deal Hopes Offset Inflation Fears

Gold Prices Rise as US and Iran Close in on Deal to Reopen Strait of Hormuz

Gold prices surged on Sunday as signs emerged that the United States and Iran are nearing a deal to reopen the Strait of Hormuz, tempering inflation concerns. Bullion rose to around $4,575 an ounce, erasing a moderate loss from last week.

The negotiations on the precise language of the deal are ongoing, and it may take several days for both sides to obtain final approval, according to US officials. President Donald Trump expressed caution, stating on social media that he would not "rush" into an agreement. Earlier, US Secretary of State Marco Rubio hinted at potential progress, suggesting that there may be "some good news" regarding Hormuz in the coming hours.

Despite the positive sentiment, gold's reaction to the headlines was still "relatively muted," according to Justin Lin, analyst at Global X ETFs in Sydney. Markets have grown skeptical of President Trump's announcements, which have fizzled into nothing multiple times before. As a result, investors are waiting for concrete evidence of cooperation from Iran before confirming moves higher and lowering inflation expectations.

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Bullion is still down about 13% since the conflict began in late February. The Iran war has sent energy prices soaring, prompting traders to ramp up rate-hike bets. The money market is pricing in a virtually certain start to rate hikes by the Federal Reserve by December. Higher interest rates weigh on bullion, which does not pay interest.

The upcoming Fed chair, Kevin Warsh, will be under scrutiny as investors seek clues on his view of the economy. Spot gold was up 1.5% at $4,575.30 an ounce at 8:11 a.m. in Singapore. Silver was 4% higher at $78.53, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was down 0.2%.

Note: Platinum and palladium prices were not specified in the original text, so they are left blank in the table.

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