Gold Prices Surge Amid Renewed Investor Interest Following Israel-Lebanon Ceasefire

Gold Prices Rise as Israel and Lebanon Agree to Ceasefire

Gold prices surged to near $4,465 an ounce after Israel and Lebanon announced a conditional ceasefire, a possible step towards resolving the wider Middle East conflict. The agreement, which was contingent on a complete cessation of fire from Iran-backed Hezbollah, was reached in a joint statement with the US.

The ceasefire follows renewed fighting in the Middle East on Wednesday, which marked the most serious flare-up since a ceasefire went into effect in April. Kuwait and Bahrain were caught in the crossfire as the strikes threatened to derail peace negotiations between the US and Iran. The protracted disruption to energy flows via the Strait of Hormuz has driven oil prices higher and raised concerns around global inflation, making central banks more likely to keep interest rates steady or even raise them.

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Bullion has moved largely in an inverse relationship with oil since the conflict began in late February. It fell sharply in the early days of the conflict and remains about 16% below its immediate pre-war level, though it has traded in a narrow range for the last few weeks. After three days of gains, oil slipped on news of the Israel-Lebanon deal.

The agreement has eased near-term pressure on gold from yields and the dollar, while bullion's pullback toward a long-term trend line is drawing dip-buyers back in. Without a more comprehensive resolution to the conflict, however, inflationary pressures are set to persist. Federal Reserve Bank of Dallas President Lorie Logan said officials may need to raise interest rates later this year to bring inflation back to the US central bank's 2% target.

Spot gold was 0.2% higher at $4,446.50 an ounce as of 8:44 a.m. in Singapore. Silver gained 0.5% to $73.09 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, slipped 0.1% after ending the previous session 0.3% higher.