Key insights
- Gold prices rose due to a weaker dollar and easing oil prices, driven by signs of de-escalation in the Middle East. Trump's shift towards diplomacy with Iran reduced immediate inflation concerns, supporting gold. A potential US-Iran agreement weakened the dollar, further benefiting gold. Reduced energy-led inflation risks could lower the chance of further Federal Reserve tightening, which is supportive for non-yielding assets.
Investing.com-- Gold prices rose in Asian trading on Wednesday, supported by a weaker dollar and easing oil prices, as signs of de-escalation in the Middle East reduced immediate inflation concerns.
Spot gold advanced 2.3% to $4,663.85 an ounce by 02:51 ET (06:51 GMT). U.S. Gold Futures for June climbed 1.7% to $4,647.31.
The yellow metal gained nearly 1% in the previous session.
Get premium commodity market insights with InvestingPro
U.S. President Donald Trump said on Tuesday that Washington would pause an operation aimed at restoring commercial shipping through the Strait of Hormuz and that a deal with Iran was close.
The move marked a shift toward diplomacy after heightened tensions earlier this week, when Trump’s “Project Freedom” initiative to secure maritime routes through the strait triggered a military response from Iran, sending oil prices sharply higher.
Gold, traditionally a safe-haven asset, has come under pressure as a spike in energy prices stoked inflation risks and reinforced expectations that interest rates could stay higher for longer-- factors that tend to weigh on non-yielding bullion.
Oil prices extended losses in Asian trading after Trump’s comments, easing some concerns about prolonged supply disruptions.
The pullback in crude helped temper inflation expectations, providing some relief to gold markets even as geopolitical risk premiums eased.
"A more durable truce would reduce energy-led inflation risks and lower the chance of further Federal Reserve tightening, which is supportive for non-yielding assets," ING analysts said in a note.
Meanwhile, the U.S. dollar weakened against major peers on growing optimism over a potential U.S.-Iran agreement, making gold cheaper for holders of other currencies.
The US Dollar Index traded 0.4% lower in Asian hours.
Among other precious metals, silver prices jumped 4% to $75.73 per ounce, while platinum advanced 2.2% to $2,000.40/oz.
Benchmark Copper Futures on the London Metal Exchange climbed 1.5% to $13,289.78 a ton, while U.S.Copper Futures rose 1.7% to $6.09 a pound.