The move followed comments from U.S. President Donald Trump suggesting a possible path toward a peace agreement, including a temporary pause in operations supporting naval escorts through the Strait of Hormuz. The development helped push both the U.S. dollar and crude oil prices lower, while strengthening demand for safe-haven assets.
Spot gold jumped 2.7% to $4,680.91 per ounce as of 0811 GMT, after briefly touching its highest level since April 28. U.S. gold futures for June delivery also rose 2.7% to $4,693.20.
At the same time, Iranian officials reiterated that any resolution would require firm conditions. Iran’s foreign minister said the country would only accept “a fair and comprehensive agreement” in ongoing negotiations aimed at ending conflict in the Middle East.
“Reduction in geopolitical risk premium” drives metals higher
Market analysts say the gold rally reflects shifting risk sentiment as traders reassess tensions in the region.
Kelvin Wong, senior market analyst at OANDA, said: “Oil prices retreated on reduction in geopolitical risk premium, after the U.S. confirmed that the ongoing fragile ceasefire between Iran is still intact, despite the skirmish that was seen at the start of this week.”
However, he warned that sentiment remains highly sensitive. “Any signs of re-escalation of tension between the two of them, you will see gold prices seeing some form of profit-taking, or for short-term speculators to unwind their near-term net long position in gold,” he added.
Weaker dollar and oil swings support gold
The precious metals rally was also supported by a softer U.S. dollar, which typically makes gold cheaper for international buyers. Meanwhile, falling crude oil prices eased inflation concerns, contributing to shifts in investor positioning.
Still, analysts note that lower oil prices reduce inflation expectations, which can in turn influence interest rate outlooks—an important factor for gold, which does not yield interest and tends to perform better in lower-rate environments.
Markets eye U.S. jobs data and Fed outlook
Investors are now focused on upcoming U.S. non-farm payrolls data, which will provide fresh signals on the strength of the labour market and the likely direction of monetary policy from the Federal Reserve.
Stronger economic data could reinforce expectations that interest rates will remain elevated, potentially limiting gold’s upside, while weaker figures may revive bets on future rate cuts.
According to ANZ analysts, broader structural risks continue to support bullion. “Factors such as economic growth risks, worsening geopolitical relations, currency volatility and downside risks to equity markets will continue to support gold’s role as a portfolio diversifier,” the bank noted.
Broad rally across precious metals
Gold was not alone in its upward move. Other precious metals also posted strong gains:
- Silver rose 4.6% to $76.16 per ounce
- Platinum gained 2.9% to $2,009.25
- Palladium increased 2.4% to $1,521.50
The coordinated rally reflects renewed investor appetite for safe-haven and industrial metals amid shifting macroeconomic and geopolitical conditions.