Gold Rallies as US-Iran Peace Deal Lifts Sentiment

Gold Prices Surge as US-Iran Peace Framework Boosts Market Sentiment

Gold prices extended their upward momentum on Monday, climbing more than 2% after the United States and Iran announced a preliminary agreement aimed at ending their prolonged conflict. The development improved investor sentiment across global markets while reducing concerns about supply disruptions and escalating geopolitical tensions.

Spot gold rose 2.5% to $4,322.87 per ounce, reaching its highest level since June 9 and marking a third consecutive session of gains. Meanwhile, U.S. gold futures for August delivery advanced 2.5% to $4,344.80 per ounce as traders responded positively to the latest diplomatic breakthrough.

According to officials from both countries, the proposed agreement includes steps to end hostilities, remove the U.S. blockade on Iran, and facilitate the reopening of the strategically important Strait of Hormuz. The agreement is expected to be formally signed later this week in Switzerland.

The announcement triggered a decline in the U.S. dollar, which fell to its lowest level in ten days. A weaker dollar typically makes gold more attractive and affordable for international buyers, providing additional support to bullion prices.

At the same time, crude oil prices dropped by more than 4% as markets anticipated smoother energy supplies and reduced risks in the Middle East. Lower oil prices are expected to ease inflationary pressures, a factor that often influences central bank interest-rate decisions and investor demand for safe-haven assets.

Market analysts noted that the combination of a softer dollar, declining oil prices, and improved geopolitical conditions has created a favourable environment for gold. However, they cautioned that the precious metal's future direction will largely depend on the successful implementation and durability of the proposed peace agreement.

Investors will continue to monitor developments surrounding the formal signing of the deal, as well as broader economic indicators, for clues about the next move in gold and global financial markets.