Key Highlights
- Gold surged past $4,700 per ounce, reaching its highest point in two weeks during Thursday’s trading
- Optimism surrounding a potential US-Iran peace agreement drove oil prices down, alleviating concerns about persistent inflation
- The declining US dollar enhanced gold’s appeal to international purchasers, strengthening demand
- Tehran is considering a comprehensive 14-point peace proposal from Washington, with negotiations scheduled in Pakistan for next week
- Silver experienced a dramatic surge exceeding 5%, while platinum and palladium posted gains as well
The precious metal climbed above the $4,700 threshold per ounce following its third consecutive session of advances on Thursday. The rally intensified as market participants grew increasingly optimistic about potential diplomatic progress between Washington and Tehran that could lead to the reopening of the Strait of Hormuz.
Spot gold advanced 1.2% to reach $4,747.26 per ounce during mid-morning trading in New York. June gold futures contracts rose 1.3% to $4,753.71.
During Wednesday’s session, the precious metal posted an impressive gain exceeding 3% — marking its most substantial single-day advance since the closing days of March. This surge pushed the metal to levels not witnessed in a fortnight.
Silver demonstrated exceptional strength as well. The white metal climbed over 5% on Thursday following a 6.2% rally the previous day. Both platinum and palladium recorded upward movements as well.
Gold had experienced approximately a 10% decline following the outbreak of tensions with Iran in late February. The blockade of the Strait of Hormuz — a critical maritime chokepoint accounting for roughly one-fifth of global oil shipments — caused energy costs to spike dramatically, intensifying concerns about sustained inflationary pressure.
Elevated inflation generally prompts central banks to raise interest rates. This environment proves unfavorable for gold, which generates no yield. Consequently, when inflationary pressures diminish, gold typically gains traction.
Diplomatic Framework Reduces Inflation Anxiety
Washington has presented a concise, single-page framework containing 14 key points designed to revive peace negotiations with Tehran. The Wall Street Journal reports that formal discussions are slated to commence next week in Pakistan.
Iran’s Foreign Minister Abbas Araghchi conducted meetings with his Pakistani counterpart to address the developing situation. Both officials emphasized the importance of maintaining diplomatic channels and dialogue to prevent further deterioration of relations.
Tehran was anticipated to transmit its response to Washington’s proposal through Pakistani intermediaries within 48 hours of Wednesday. CNN reported that this response was expected by Thursday.
President Trump told reporters at the White House on Wednesday that communications with Tehran had been “very good” during the preceding 24 hours. He indicated that the US had “won” the confrontation.
US Central Command has announced that American forces successfully established a navigable corridor through the Strait of Hormuz.
Greenback Weakness Bolsters Precious Metal
Oil prices continued their descent on Thursday, although they remain elevated compared to pre-conflict levels. The decline in crude prices diminished expectations that inflation would persist at elevated levels for an extended period.
US Treasury yields retreated as a consequence. This development enhanced gold’s attractiveness to investors seeking safe-haven assets.
The US dollar declined to levels seen before the conflict began. Because gold trades in dollar-denominated contracts, a softer greenback reduces the cost for international buyers, typically increasing global demand.
The Bloomberg Dollar Spot Index declined 0.2% on Thursday after dropping 0.6% in the prior session.
ING analysts noted that a prospective decline in energy costs “provides the Federal Reserve with additional flexibility to reduce rates, which supports gold prices.”
TD Securities strategist Ryan McKay indicated that gold must maintain support above the $4,700 level to sustain its bullish momentum, identifying $4,900 as the subsequent critical resistance point.
Market participants are now focused on Friday’s US non-farm payrolls data release for additional insights into the Federal Reserve’s potential interest rate trajectory.
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