Gold hits two-week high as dollar falls amid Iran conflict
Spot gold rose 1.3 percent to 4,728.75 dollars as the dollar weakened. Investors are monitoring the Iran conflict and its impact on global monetary policy.
Gold prices rose for a fourth consecutive session on Wednesday, reaching a near two-week high as the United States dollar softened. Investors remained focused on the geopolitical situation involving Iran and its potential impact on global monetary policy. Spot gold increased by 1.3% to $4,728.75 per ounce by 1309 GMT, while U.S. gold futures climbed 1.7% to $4,755.70.
The decline in the dollar has made gold more attractive to holders of other currencies. Market analysts are closely watching the conflict's progression, particularly regarding the Strait of Hormuz. Bob Haberkorn, a senior market strategist at RJO Futures, suggested that gold could return to levels above $5,000 per ounce if a path toward de-escalation emerges, which could bring interest rate cut expectations back into focus.
"The focus is on Iran and the Strait (of Hormuz) - how this conflict unfolds, and what the path forward looks like."
Political developments have also influenced market sentiment. U.S. President Donald Trump indicated on social media that the administration is reviewing a ceasefire request from the Iranian leadership, contingent on the security of maritime routes.
"We will consider when Hormuz Strait is open, free, and clear."
In March, spot gold prices fell by more than 11% as rising energy costs linked to the conflict fueled inflation concerns, leading markets to reduce expectations for looser monetary policy. While gold is traditionally a safe-haven asset, high interest rates can dampen its appeal. Tony Sycamore, a market analyst at IG, noted that a peace agreement could have a dual effect on the market.
"On one hand, a lasting peace agreement would remove the geopolitical safe-haven bid that supported prices in the run-up to the conflict."
Sycamore added that lower oil prices and easing inflation could eventually lead to Federal Reserve rate cuts by 2026. Economic data showed that private payrolls in the United States grew steadily in March, while retail sales were strong in February. However, there are concerns that rising fuel costs could impact future consumer spending.
Other precious metals saw a decline in value during the session. Silver fell 0.5% to $74.70 per ounce, while Platinum dropped 0.3% to $1,942.80. Palladium also eased, losing 0.8% to reach $1,464.88.
