Gold prices increased on Friday as investors evaluated reports of a potential U.S.-Iran ceasefire amid rising inflation concerns and expectations of U.S. interest rate hikes. Spot gold rose 0.2% to $4,499.56 per ounce by 0231 GMT, though it remained down approximately 0.2% for the week. U.S. gold futures saw a slight decline of 0.1%, trading at $4,529.80.
After falling to a two-month low on Thursday, gold prices rebounded following news of a ceasefire extension between the U.S. and Iran. Brian Lan, Managing Director of GoldSilver Central, remarked, “Yesterday, we saw gold go down to $4,360 and was likely to drop further until the (ceasefire) announcement came, which caused a rapid price reversal. This is where the market continues to be this morning.”
The United States and Iran reached a preliminary agreement on Thursday to extend their ceasefire and lift shipping restrictions through the Strait of Hormuz, according to sources cited by Reuters. However, U.S. President Donald Trump has yet to endorse the deal, and Iranian state media indicated that it is not finalized.
Inflation in the U.S. surged at its fastest rate in three years in April, fueled by rising energy costs linked to the Iran conflict. This development has solidified economists’ expectations that the Federal Reserve will maintain interest rates at their current levels well into the next year. Federal Reserve Bank of New York President John Williams stated that central bank policy is appropriately aligned with economic outlooks and predicted that inflation would likely remain elevated in the near term before easing later in the year.
In related markets, spot silver rose 0.1% to $75.67 per ounce, and palladium increased by 0.4% to $1,373.14, with both metals poised for weekly gains. Conversely, platinum fell 0.4%, trading at $1,915.53 and on track for a weekly loss.
