Gold climbs to one-week high as US-Iran peace deal weakens dollar, sinks oil

Gold and Silver Rally as US-Iran Peace Deal Sends Oil Lower and Weakens Dollar

Gold climbed to its highest level in a week on Monday as the announcement of a US-Iran peace agreement sent oil prices tumbling, eased inflation expectations, and weakened the US dollar — a combination that bolstered demand for precious metals.

Spot gold rose as much as 1.8% to $4,297 per ounce in early Asian trading on Monday, while US gold futures for August delivery gained 1.9% to $4,318, according to the Business Times of Singapore. The rally came after US and Iranian officials confirmed on Sunday that they had agreed on a framework to end their nearly four-month conflict, with the formal signing scheduled for June 19 in Switzerland.businesstimes

Peace Framework Lifts Metals, Pressures Dollar

The US dollar index fell to approximately 99.45 on Monday, down 0.29% from the previous session, according to Trading Economics. A weaker dollar makes gold — which is priced in the greenback and yields no interest — more attractive to holders of other currencies.tradingeconomics

Silver, which had already surged 5.5% in futures trading on Friday following President Donald Trump’s announcement that he had canceled planned strikes on Iran, extended gains into the new week. Copper also advanced on the London Metal Exchange as the deal removed a key risk to industrial metals demand, with traders pricing in a more stable outlook for global manufacturing.economies

The metals rally was driven by falling crude oil prices, which dropped sharply on the prospect of Iranian oil returning to global markets. The deal calls for lifting sanctions on Iran’s oil exports and reopening the Strait of Hormuz within 30 days. Lower energy costs ease inflationary pressures, reducing the likelihood that central banks will need to tighten monetary policy further — a dynamic that benefits non-yielding assets like gold and silver.aljazeera

Deal Terms and Market Implications

Under the agreement announced by Pakistani Prime Minister Shehbaz Sharif, who mediated the talks, the US will lift its naval blockade and release frozen Iranian assets, while Iran will reopen the strait and enter 60-day negotiations on dismantling its nuclear program. A senior US official told the Associated Press that the destruction of Iran’s nuclear materials is a pivotal element of the emerging pact.cnbc

The European Central Bank had raised interest rates just days earlier in response to war-driven inflation, and markets now face the question of whether the peace deal will allow central banks to pause or reverse course. According to CME FedWatch data, markets still see a possibility of a US rate hike before year-end, though falling oil prices could shift that calculus if they translate into lower consumer prices in the months ahead.usagold