Key Highlights
- Gold extended its winning streak to three consecutive sessions, holding above $4,700 per ounce
- Diplomatic progress between Washington and Tehran has contributed to declining oil prices
- The US dollar retreated to levels seen before the conflict escalation
- Silver posted its strongest single-session gain in weeks, climbing more than 6% on Wednesday
- Market attention turns to Friday’s employment data for insights into Federal Reserve policy direction
Precious metals have maintained their upward momentum for a third consecutive trading session as diplomatic developments between Washington and Tehran contribute to declining energy costs and reduced inflation anxiety.
Spot gold advanced 1% to reach $4,736.61 per ounce during Thursday’s session. June-dated US Gold Futures increased 1.1% to $4,746.86.
The precious metal surged more than 3% during Wednesday’s trading — marking its strongest daily performance since the final days of March. This rally followed a significant decline in crude oil prices amid reports of advancing discussions between US and Iranian officials.
Axios reported that the White House appears close to reaching a memorandum of understanding with Iranian authorities to resolve the ongoing conflict. Tehran has indicated it is examining the proposal. President Donald Trump expressed optimism that Iranian leadership seeks an agreement.
Trump announced via social media Wednesday that the US would conclude its military operations and remove its blockade of the Strait of Hormuz, contingent upon Iranian acceptance of terms — while acknowledging this assumption carries significant uncertainty.
Oil prices dropped more than 7% on Wednesday before stabilizing Thursday as traders awaited additional details regarding the ongoing negotiations.
The Connection Between Falling Energy Costs and Gold’s Strength
Declining energy prices diminish the likelihood of sustained inflationary pressure. This development tends to reduce US Treasury yields and apply downward pressure on the dollar, creating favorable conditions for precious metals.
Gold trades in US dollars, meaning currency weakness makes the metal more affordable for international purchasers. The metal generates no yield, making it more competitive against bonds when interest rates decline.
“The potential easing in energy prices gives the Fed more room to cut rates, which is positive for gold,” analysts at ING said in a note.
The US Dollar Index declined 0.1% during Asian hours Thursday, trading near levels observed before the conflict escalation.
Gold had experienced an 11% decline following the onset of US-Iran tensions in late February. The Strait of Hormuz closure had driven energy prices higher and amplified concerns about persistent inflation keeping monetary policy restrictive.
Federal Reserve Officials Maintain Vigilance on Price Pressures
Caution persists among some policymakers. Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem both emphasized that inflation remains above the Federal Reserve’s 2% objective.
TD Securities strategists cautioned that diplomatic headlines remain “extremely fragile to reversal” given that US and Iranian positions appear largely consistent with previous negotiation attempts.
Silver climbed 1.9% to $78.79 per ounce on Thursday, following Wednesday’s 6.2% surge. Platinum recorded modest gains, while copper traded relatively unchanged.
Market participants now await Friday’s US non-farm payrolls release. The employment data could provide valuable insight into the Federal Reserve’s interest rate trajectory for the remainder of the year.
Spot gold traded at $4,701.96 per ounce as of 1:59 p.m. Singapore time Thursday.
