Quick overview

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Gold prices rose as the US and Iran prepared to sign a temporary peace agreement that might ease war-related inflationary pressures on the world economy.

 

After rising more than 6% over the previous four sessions, bullion was close to $4,325 per ounce. The Islamic Republic would be permitted to sell its oil immediately and eventually gain access to its frozen assets, according to financial details of the US-Iran agreement that are becoming public. The Strait of Hormuz can fully reopen by Friday, according to US President Donald Trump, but some European allies remain concerned about potential risks.

The energy supply crisis that has caused inflation to skyrocket and led many central banks to hold or even raise interest rates would be alleviated by opening the waterway, which would be detrimental to non-yielding bullion.

Investors turned their attention to the Federal Reserve’s first policy decision under new chairman Kevin Warsh as they searched for hints about how he might manage the inflation risk. The market anticipates that rates will remain unchanged. According to a note from Standard Chartered Plc analysts, including Emily Ashford, “gold’s firming correlation with real yields shows focus has shifted to the impending Fed meeting.

Although the potential US-Iran agreement “bodes well for gold finding a price floor sooner rather than later,” given that the precious metal fell below its 200-day moving average earlier this month, prices are probably going to be erratic.