Gold Surges Over 3%, Dollar Weakens
Gold prices surged on Wednesday (May 6) following new signs that the United States and Iran are getting closer to reaching a peace agreement. This sentiment weighed on oil prices and the US dollar, making gold once again attractive to market participants.
Spot gold prices rose 3.1% to US$4,698.24 per ounce, while gold futures rose 3.0% to US$4,705.06 per ounce. This increase occurred amid growing hopes that the conflict in the Middle East could soon ease.
An Axios report stated that the White House assessed that a deal with Iran was approaching, with a one-page memorandum being drafted. The document is said to serve as an initial framework for more detailed nuclear negotiations, including a possible suspension of Iran's nuclear enrichment, the lifting of US sanctions, and the release of frozen Iranian funds.
The peace signal also opens the possibility of lifting restrictions in the Strait of Hormuz, allowing the return of global energy transit routes. These hopes sent oil prices lower, with Brent returning below US$100 per barrel, although still higher than pre-war levels.
Causally, the decline in oil prices helped ease concerns about energy-driven inflation. If inflationary pressures subside, central banks are less pressured to raise interest rates. This situation benefits gold, as it doesn't provide a yield like bonds and is typically more attractive when interest rate expectations decline.
At the same time, the US dollar weakened. A weaker dollar makes gold cheaper for global buyers outside the United States. However, demand for safe-haven assets hasn't completely disappeared, as the US-Iran deal isn't finalized. Therefore, gold continues to receive support from two directions: a weaker dollar and lingering geopolitical uncertainty. (yds)
Source: Newsmaker.id
