Gold rises 1% to $4,093 as U.S.-Iran pause eases tensions

Gold rose 1% to $4,093.89 a troy ounce in Asian trade after the U.S. and Iran paused hostilities over the weekend.

"Lower oil prices likely help to stem global inflationary pressures, easing concerns of monetary-policy tightening," Konstantinos Chrysikos at Kudo.com said in an email.

The U.S. paused airstrikes on Iran after 13 consecutive nights of bombing, while Iran held technical talks with Oman over vessel transit through the Strait of Hormuz, Iran's Foreign Ministry spokesperson Esmail Baghaei said. Crude oil retreated on the reduced geopolitical risk premium, with Brent falling as the dollar softened and bond yields dipped, creating a favorable backdrop for nonyielding assets.

Gold at $4,093.89 is within striking distance of its recent highs, with the next catalyst hinging on whether the diplomatic pause holds or fighting resumes. A sustained truce could cap gold near current levels, while renewed strikes may push prices higher as safe-haven demand resurges.

The conflict, which began Feb. 28, has disrupted the Strait of Hormuz, a waterway through which about 20% of the world's oil normally flows. Iran's closure of the strait sent crude prices soaring and contributed to elevated inflation globally. Yemen's Iran-aligned Houthi movement separately attacked Saudi oil infrastructure along the Red Sea coast over the weekend, further threatening energy supply routes. Gold has gained more than 25% since the start of the year, outpacing most major asset classes as geopolitical uncertainty drove demand for safe-haven assets.

A regional official involved in mediation said both the U.S. and Iran want to return to the interim ceasefire deal signed in June, with negotiations centered on Iran managing vessel transit through the strait with fewer restrictions. Baghaei confirmed that talks with Oman made progress over the weekend, with the Omani delegation leaving Tehran on Saturday afternoon.

The pause in fighting follows 13 consecutive nights of American airstrikes that targeted Iran's coastal defenses, bridges and infrastructure. President Donald Trump has said the U.S. could either continue dismantling Iranian military capabilities piece by piece or negotiate, while insisting he is "not in a hurry" to resolve the conflict ahead of November's midterm elections. Israeli Prime Minister Benjamin Netanyahu's planned visit with Trump next week in Washington adds another layer of uncertainty, with Israel having been notably absent from the renewed American attacks.

Higher interest rates typically weigh on nonyielding assets like gold, Chrysikos said. The retreat in oil prices reduces the urgency for central banks to maintain a tight monetary policy stance, supporting gold's appeal as a store of value. Spot gold's gain outpaced other precious metals in Asian trading, with the metal finding support from both the softer dollar and declining bond yields.

This article is for informational purposes only and does not constitute investment advice.