Gold prices rose sharply on Thursday, gaining more than 1% in global markets and recovering part of the losses recorded during previous trading sessions. The rebound came after oil prices declined following the temporary agreement between the United States and Iran. Lower oil prices reduced inflation concerns and increased investor demand for gold.
After Asian markets opened, the price of one ounce of gold climbed by 1.4% and reached $4,316. The increase followed Wednesday’s decline of 1.7%. In futures trading, one ounce of gold traded at nearly $4,333.
Kelvin Wong, a senior market analyst at OANDA, said gold prices received support from positive developments in the Middle East. He noted that lower oil prices helped improve sentiment in the precious metals market and encouraged investors to return to gold.
On Wednesday, the United States and Iran released the text of their temporary agreement. The 14-point deal extends the ceasefire reached in April for another 60 days. The extension aims to create more time for negotiations and a final settlement.
However, U.S. President Donald Trump warned that military strikes and bombing operations could resume if Tehran fails to comply with the terms of the agreement.
Despite the latest rally, some analysts believe gold prices may struggle to remain at current highs. Investors are increasingly expecting the U.S. Federal Reserve to raise interest rates again.
On Wednesday, the Federal Reserve decided to keep its benchmark interest rate between 3.50% and 3.75%. However, nine of the central bank’s nineteen policymakers believe another rate increase will be necessary this year.
Market surveys also show that expectations for a rate hike in December have increased significantly. The probability has risen to 85%, compared with only 61% previously. Higher interest rates usually strengthen the US dollar and reduce the appeal of non-yielding assets such as gold.
As a result, investors will closely monitor future signals from the Federal Reserve to determine the next direction of gold prices.
