Gold Price Movement

Spot gold edged higher on Friday, adding 0.2% to close at $4,218.91 per ounce, while gold futures rose 3.1% to $4,239.75 per ounce. Despite the intraday gain, the weekly trajectory remained negative, with spot gold down 2.6% and futures down 2.9% for the week.

US‑Iran Peace Deal Outlook

President Donald Trump announced that a U.S.–Iran peace agreement had been approved and could be signed as early as the weekend, suggesting the deal would reopen the Strait of Hormuz and end the U.S. naval blockade of Iranian ports. Trump also stated that Iran would “never” possess a nuclear weapon under the agreement, though he later criticized Iran’s rhetoric as unrelated to the truth. Iran’s foreign minister, Seyed Abbas Araghchi, countered that a memorandum of understanding (MoU) with Washington was “never been closer” and urged the media to refrain from speculation until details are released. Pakistan Prime Minister Shehbaz Sharif, speaking on social media, affirmed that a final text of the peace deal had been reached and that Pakistan was working with both sides to finalize next steps.

Oil Market Reaction

Against this backdrop, Brent crude futures, which expire in August, fell to their lowest level in over two months on Friday, though they remained above the pre‑war benchmark of roughly $70 per barrel. The decline was attributed to reduced geopolitical tension, yet the conflict‑driven oil price surge has already generated a global inflationary shock.

Inflation Data and Central Bank Outlook

U.S. consumer price index (CPI) and producer price index (PPI) data for May showed headline CPI and PPI posting their largest annual increases since April 2023 and November 2022, respectively. Core CPI and core PPI figures were milder, but headline numbers were at three‑year highs, reinforcing expectations that the Federal Reserve will keep rates elevated or possibly tighten further.

Federal Reserve Meeting Expectations

The first Federal Open Market Committee (FOMC) meeting under new chair Kevin Warsh is scheduled for next week. JPMorgan analyst Michael Feroli expects no change to the federal funds target range of 3.5‑3.75% and anticipates a unanimous vote. He noted that labor market data have firmed since the last meeting in late April and that inflation remains above the Fed’s 2% goal, likely pushing the committee toward a more hawkish stance. Feroli also commented that the post‑meeting press conference will be the most closely watched element, as the chair’s remarks shape market narratives. Other central banks on the agenda include the Bank of Japan, the Bank of England, and the European Central Bank, which recently became the first major reserve bank to hike rates, citing an Iran‑linked oil price spike as a key factor.

Contributors

The article was contributed by Ayushman Ojha and Scott Kanowsky.