Gold Prices Rise on Iran Peace Deal Optimism Amid Fed Rate Uncertainty
Investors pushed spot gold up 0.2% to $4,263.81 per ounce by 09:45 ET (13:45 GMT) on Thursday, while the front‑month gold futures contract slipped 2.2% to $4,283.95 per ounce. The metal had fallen 1.7% in the prior session as a stronger U.S. dollar and rising Treasury yields followed the Federal Reserve’s latest policy decision.
The rally was anchored by optimism surrounding the interim peace agreement between the United States and Iran. The 14‑point memorandum initiates a 60‑day negotiation period during which Iran will permit toll‑free passage through the Strait of Hormuz, with full‑capacity traffic expected to be restored within 30 days. Analysts expect the accord to ease Middle‑East tensions, reopen key energy export routes, and temper fears of a prolonged oil‑supply shock, thereby reducing energy‑driven inflation concerns and supporting bullion as a portfolio hedge.
Meanwhile, the Federal Reserve kept its policy rate unchanged in the 3.50%‑3.75% target range and signaled that policymakers still see scope for tighter monetary policy later in the year. Updated projections show nine of 19 Fed officials now anticipate at least one rate increase in 2026, a notable shift from earlier expectations. In his first meeting as Fed chair, Kevin Warsh emphasized a firm stance on inflation, highlighted the central bank’s commitment to restoring price stability, and raised the Fed’s inflation forecasts. The higher inflation outlook prompted investors to scale back expectations for rate cuts and contributed to a stronger U.S. dollar.
A stronger greenback typically makes dollar‑denominated gold more expensive for overseas buyers, while higher interest rates increase the opportunity cost of holding non‑yielding bullion. These dynamics capped further upside in gold despite the geopolitical tailwind.