Gold traded above $4,800 an ounce on Wednesday, extending gains from the previous session as easing geopolitical tensions and softer macroeconomic signals supported the precious metal.
Prices rose about 2% in the prior session, driven by renewed optimism that the United States and Iran could reach a deal to de-escalate their ongoing conflict, reducing the risk of an energy-driven inflation shock.
Officials in Washington and Tehran are reportedly working to schedule a second round of negotiations after last weekend’s talks collapsed, raising cautious expectations for a potential breakthrough. Despite ongoing tensions, including a US naval blockade of Iranian oil exports in the Strait of Hormuz, both sides appear to be exploring interim measures to support dialogue.
In energy markets, crude oil prices retreated below $90 per barrel, easing concerns about supply disruptions and inflation. The pullback in oil has reduced pressure on central banks to maintain aggressive monetary tightening.
At the same time, the US dollar weakened, with the dollar index falling to a six-week low, making gold more attractive to investors holding other currencies.
Market expectations around monetary policy have also shifted. The Federal Reserve has adopted a more cautious stance, with investors dialing back bets on further interest rate hikes as policymakers assess evolving inflation risks.
The combination of softer oil prices, a weaker dollar and reduced expectations of tighter monetary policy has reinforced demand for gold, even as geopolitical uncertainties persist.
