Gold Extends Gains as Trump Touts Progress with Iran and Dollar Falls

Gold extended its gains after US President Donald Trump touted progress toward a final agreement with Iran, reducing inflationary pressure and sending the dollar lower.

Bullion rose as much as 1.6% to near $4 630 per ounce, following a 0.8% gain on Tuesday. A gauge of the dollar declined 0.3%, making gold cheaper for many buyers. Trump said in a social media post that "great progress" has been made with Iran and that he would pause a US-led effort to help stranded ships exit the Strait of Hormuz to see whether an agreement can be finalised.

Diplomatic Progress and Lingering Risks

US Defence Secretary Pete Hegseth said the truce that began just under a month ago is holding, while Secretary of State Marco Rubio stated that offensive operations are over as Washington shifts to protecting shipping in the strait. Iranian Foreign Minister Abbas Araghchi said talks were "making progress."

However, reports that a cargo vessel was hit by an unknown projectile the day after clashes involving ships in the Strait of Hormuz signal that tensions continue to simmer. With the pathway to a deal that reopens the Strait still unclear, gold remains under near-term pressure as inflationary concerns raise expectations for Federal Reserve rate hikes, which would weigh on non-yielding bullion.

Gold's Recent Performance

According to the chart showing gold's price history from June 2022 to May 2023, gold traded in a range between approximately $1 800 and $2 000 per ounce over that period, with significant volatility reflecting shifting macroeconomic and geopolitical conditions.

Since the war began in late February, bullion has fallen more than 12%. Bond traders are boosting wagers that the central bank's next policy move could be a rate increase rather than a cut, as expectations for a hike gain traction ahead of the US employment report. The jobs data could show stabilising labour market conditions, allowing inflation risks to take centre stage among investor concerns.

Analyst Perspective

Precious metals are entering summer with a "structural positioning paradox," according to Nicky Shiels, head of research and metals strategy at trader MKS PAMP SA. The notional amount of money invested in gold remains crowded, but positioning remains light in terms of contracts and ounces.

"The medium-term bull case on debasement, supply chain fragmentation, and monetary order breakdown remains intact," she said, "but the near-term path to new highs requires generalist institutional capital to step in and fill a vacuum that seasonal patterns and exhausted retail cannot."

Current Prices

Spot gold rose 1.5% to $4,627.32 per ounce. Silver was 2.9% higher at $74.98. Platinum and palladium also advanced.

Market Sentiment:  

The sentiment is cautiously balanced, with near-term headwinds from potential Fed rate hikes offset by medium-term structural support. Gold's 1.5% gain on diplomatic progress and dollar weakness provides a temporary reprieve, but the fundamental tension remains: a ceasefire reduces safe-haven demand, while persistent inflation risks keep rate hike expectations alive. The paradox highlighted by Shiels — crowded notional positioning but light contract-level positioning — suggests that gold could be vulnerable to a sharp move in either direction depending on how the US-Iran situation and Fed policy evolve. The upcoming US employment report is the next key catalyst. A strong jobs print would reinforce rate hike expectations and pressure gold lower; a weak print would ease those fears and support bullion. The medium-term bull case (debasement, fragmentation, monetary order breakdown) remains valid, but near-term price discovery is dominated by geopolitics and Fed expectations. Gold is trading in a waiting pattern, with $4,600 acting as a key psychological level. Breakout above $4,700 would signal renewed institutional interest, while a break below $4,400 would suggest rate hike fears are winning. For now, gold is range-bound with a slight upward bias on diplomatic optics, but the path of least resistance depends entirely on the jobs report and the trajectory of US-Iran talks.

Disclaimer:
This content has been generated using AI technology and is intended for informational purposes only. While efforts have been made to ensure accuracy and relevance, this text should not be considered professional advice or an official statement. Always verify information from authoritative sources before making any decisions. This is not financial advice.