Gold Shines Amid Energy Tensions
Spot gold rose on Monday (May 25), reaching $4,562 per ounce in the European morning session, fueled by investor optimism about a potential peace deal between the US and Iran. This increase occurred as Brent oil prices fell to $95.23 per barrel, opening room for gains in safe-haven assets like gold. However, gold's gains remained limited due to concerns about prolonged high interest rates due to inflationary pressures from the energy boom.
The preliminary agreement between Washington and Tehran, which reportedly reached a framework memorandum, does not yet address the details of managing the Strait of Hormuz, a vital waterway for about 20% of global oil supplies. Iran stated that it would not charge tolls to ships passing through the strait, although service fees could be imposed, potentially alleviating the financial threat to the waterway.
US President Donald Trump asserted via social media that the US blockade of Iranian ports would remain in place until a formal agreement was ratified. This statement maintained market uncertainty, but news of the possible reopening of the strait sent oil prices sharply lower and provided a temporary boost to gold.
Market sentiment is also influenced by expectations of interest rate hikes from various central banks to curb energy inflation. Investors remain wary of the risk that surging oil prices could accelerate interest rate hikes, which typically depress demand for gold as a non-yielding asset.
The US dollar, although slightly weaker on Monday, remains viewed as a relative safe-haven amid geopolitical and energy price uncertainty. A stronger greenback could make gold more expensive for international buyers, limiting room for further upside, although the prospect of peace in Iran provides short-term positive support. (Arl)
Source: Newsmaker.id
