Gold prices surged more than 3% on Monday, reaching their highest level in over a week, after the United States and Iran agreed to a framework aimed at ending their conflict and reopening the Strait of Hormuz. Spot gold rose 3.3% to $4,356.79 per ounce by late morning in New York, after earlier touching its highest level since 5 June. U.S. gold futures also climbed 3.3% to $4,378.70.
The rally came as investors reacted to news that Washington and Tehran are expected to sign a memorandum of understanding in Switzerland on Friday. The agreement is designed to halt hostilities and restore energy shipping through the Strait of Hormuz, one of the world’s most important oil transit routes.
The peace framework sent oil prices sharply lower, easing fears of prolonged supply disruptions in the Middle East. Brent crude fell more than 4%, while natural gas prices also retreated. The decline in energy prices helped reduce inflation concerns, which had intensified during the conflict. At the same time, the U.S. dollar index slipped 0.2%, making dollar-priced gold cheaper for buyers using other currencies.
U.S. Treasury yields also moved lower as investors scaled back expectations for tighter monetary policy. "The gold market is moving past the conflict and pricing it out,” said Phillip Streible, chief market strategist at Blue Line Futures. “The peace deal news took down Treasury yields, the dollar, and oil, and those were the biggest inflation and cross-asset risks.”
Gold is often seen as a safe-haven asset during periods of geopolitical stress, so its rally after a peace announcement may appear counterintuitive. However, the recent conflict had pressured bullion by pushing oil prices higher and increasing fears that energy-driven inflation would force the Federal Reserve to raise interest rates. Higher interest rates tend to weigh on gold because the metal does not offer a yield.
With oil prices falling after the peace announcement, traders reduced their expectations for further rate increases. According to CME FedWatch data, the probability of a U.S. rate hike in December dropped to about 52.5%, down from nearly 70% last week. That shift helped gold regain momentum after falling near $4,000 an ounce last week.
Investor attention now turns to the Federal Reserve’s June 16–17 policy meeting, the first under Chair Kevin Warsh. Markets broadly expect the Fed to leave interest rates unchanged, but traders will closely watch Warsh’s tone for clues about the future rate path. Any indication that the Fed is willing to look past recent inflation pressures could further support gold.
“Gold’s next price move all comes down to Warsh, his tone, and what he is going to say about the interest-rate path,” Streible said. Analysts said a less hawkish message from the Fed could strengthen the case for a continued rebound in precious metals. However, if policymakers warn that inflation risks remain elevated, gold’s gains could be capped.
Despite Monday’s strong gains, some analysts cautioned that gold’s recovery remains incomplete.
The metal remains below important technical levels, including its 200-day moving average near $4,450 an ounce. Michele Schneider, chief market strategist at MarketGauge, said gold’s ability to hold above $4,000 is encouraging. Still, she would like to see prices move above the 200-day average before calling the recovery more durable.
David Morrison, senior market analyst at Trade Nation, warned that risks remain before the U.S.-Iran agreement is formally signed. "The danger this week is that something happens to delay the signing of the treaty on Friday,” Morrison said. “If that were to happen, then $4,000 could get tested once again.” Nick Cawley, contributing analyst at Solomon Global, also noted that gold faces resistance around its 50-day simple moving average near $4,581 an ounce, with another key level near $4,773.
The broader precious metals market joined gold’s advance. Spot silver rose 4.3% to $70.88 per ounce, while platinum gained 4.3% to $1,791.13. Palladium posted the strongest move among major precious metals, jumping 5.6% to $1,355.00. The gains reflected a wider shift in investor sentiment as falling oil prices, lower yields, and a weaker dollar supported metals across the board.
Separately, Singapore announced plans to establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services. The move is intended to expand Singapore’s role as a regional bullion hub and provide additional infrastructure for institutional gold trading and storage.
Gold’s latest rally is being driven more by relief than panic. The U.S.-Iran peace framework has lowered immediate fears of an energy shock, softened inflation expectations, and reduced pressure on the Federal Reserve to raise rates.
However, the market remains vulnerable to any delay in the formal signing of the agreement or any hawkish signal from the Fed. For now, gold has reclaimed momentum above $4,350 an ounce, but analysts say a sustained move above key resistance levels will be needed to confirm a more durable recovery.
