Gold Climbs Despite Middle East Peace Agreement
Gold prices extended their advance for a third consecutive session on Monday, reaching their highest levels since 9 June, even as news of a peace agreement in the Middle East eased geopolitical tensions.
The precious metal continued to attract investor interest despite a sharp decline in oil prices following the announcement of a preliminary accord between the United States and Iran.
During morning trading, spot gold rose to an intraday high of $4,335 per ounce, while the August futures contract climbed to $4,356 per ounce.
At the same time, expectations that the agreement could restore energy flows through the Strait of Hormuz weighed heavily on oil markets, with Brent crude falling around 5% to a low of $83 per barrel.
U.S. President Donald Trump welcomed the ceasefire agreement between Washington and Tehran, describing it as a “major agreement that will bring peace and security to the entire region.”
In a post on Truth Social, Trump added: “Many presidents have tried to achieve peace with Iran, but all have failed before me. For the first time, the leaders of the region have found a president capable of helping them achieve real peace.”
He also stated that, with the reopening of the Strait of Hormuz, “scheduled for Friday, in conjunction with the signing of the agreement and to allow for mine clearance operations, oil will flow freely again, to the benefit of both the region and the rest of the world!”
Iran later confirmed the agreement through Deputy Foreign Minister Kazem Gharibabadi, who said negotiations toward a final settlement would continue over a 60-day period and would focus primarily on sanctions relief.
He added that Iran would only proceed to the next stage of discussions once its frozen assets were released, the U.S. blockade was lifted and the war had formally ended.
The agreement arrives as investors prepare for a busy week of central bank decisions, including the first Federal Reserve meeting chaired by Kevin Warsh, which is scheduled to take place between Tuesday and Wednesday.
Before the agreement was announced, markets had increasingly expected U.S. interest rates to rise again by year-end. However, sentiment shifted after the diplomatic breakthrough.
According to the CME FedWatch Tool, the probability of a December rate increase has fallen to 48%, down from 69% last week.
Gold typically becomes less attractive when interest rates are high because it does not generate income.
Since the outbreak of the conflict in late February, gold and oil had largely moved in opposite directions. The metal lost around 18% during that period as higher energy prices raised fears of persistent inflation and tighter monetary policy.
According to Christopher Wong, FX strategist at Oversea-Chinese Banking, the agreement “makes the macroeconomic scenario less hostile for gold,” although he cautioned that “the agreement has yet to be formalized, so we could see mixed trading in the meantime.”
Wong also warned: “For gold to regain stronger bullish momentum, a more sustained improvement in the external environment would be needed, including lower yields, lower oil prices, and clearer evidence that the Fed’s hawkish hike has peaked.”