The move reflected a renewed appetite for precious metals as investors reassessed inflation risks and the likelihood of prolonged high interest rates in the United States.
Spot gold rose 1.1% to $4,559.69 per ounce by 0931 GMT, while U.S. gold futures for June delivery gained 0.9% to $4,561.30. Trading activity was relatively subdued in the U.S. due to the Memorial Day holiday, contributing to thinner liquidity across global markets.
The rally came despite mixed signals from Washington and Tehran over the prospects of an imminent agreement to ease tensions in the Middle East. While U.S. President Donald Trump said over the weekend that a memorandum of understanding had been “largely negotiated,” both sides later downplayed expectations of a near-term breakthrough, underscoring unresolved disputes in the three-month-old conflict.
Even so, markets leaned toward optimism, pricing in the possibility that easing geopolitical risk could reduce energy-driven inflation pressures.
Oil Drop and Dollar Softness Fuel Gold Strength
Gold’s gains came in tandem with a sharp decline in crude oil prices, which slipped below the $100-per-barrel mark to two-week lows as hopes of improved Iran-related diplomacy reduced fears of supply disruptions through the Strait of Hormuz.
The U.S. dollar also hovered near a one-week low, reinforcing support for dollar-denominated commodities like gold.
“Financial assets are strongly influenced by oil prices at present, and gold prices are not an exception,” said UBS analyst Giovanni Staunovo.
“Lower oil prices lift gold, in anticipation that it impacts the monetary policy of the Federal Reserve,” he added, noting that easing energy costs could reduce inflation pressure and shift expectations around future rate decisions.
Gold has still recorded a volatile year, falling about 14% since the Iran conflict began in late February, as earlier spikes in energy prices stoked inflation concerns and reinforced expectations of higher-for-longer interest rates.
Market participants continue to closely watch central bank signals, particularly following recent leadership changes at the U.S. Federal Reserve, where Kevin Warsh was sworn in as chair on Friday at a sensitive moment for monetary policy, amid inflationary pressure linked to surging fuel costs.
Broader Precious Metals Rally
The strength in gold was mirrored across other precious metals. Spot silver surged 3.1% to $77.86 per ounce, platinum rose 2.1% to $1,962.93, and palladium gained 2.8% to $1,386.47, as investors rotated into metals amid easing macro and energy-related uncertainty.