Gold Rebounds After Iran and US Reach Initial Ceasefire Agreement
Gold prices rebounded on Thursday, rebounding from a two-month low touched earlier in the session, after the U.S. dollar and oil prices weakened following news that the U.S. and Iran had reached an agreement to extend the ceasefire. Spot gold rose 1.1% to US$4,504.07 per ounce at 1:31 p.m. EDT, while U.S. gold futures closed up 1.1% at US$4,532.40.
Sources familiar with the discussions said the U.S. and Iran had reached a memorandum of understanding (MoU) to extend the ceasefire for 60 days, although the deal still requires President Donald Trump's final approval. This news lowered the geopolitical risk premium and contributed to pressure on energy, giving gold room to recover from earlier pressure.
The U.S. dollar also weakened, with the dollar index (DXY) down 0.2%, making dollar-denominated gold cheaper for overseas buyers. Brent also weakened after the report, easing energy inflation pressures that have recently been weighing on the precious metal.
Data-wise, US PCE inflation in April was recorded at 3.8% YoY (in line with expectations) and rose 0.4% MoM, slowing from 0.7% in March. TD Securities believes this data opens the way for the Fed to hold interest rates rather than tighten again, although the minutes of its late April meeting showed that more officials are open to the possibility of a rate hike if inflation persists.
Technically, gold's recovery also occurred after the market assessed prices approaching areas considered important by some market participants, including tests of long-term moving averages. With the combination of a weaker dollar, falling oil prices, and hopes of de-escalation, gold is getting some breathing room after the pressure of the last few sessions.
Source: Newsmaker.id
