Gold climbed on Thursday, driven by hopes of a potential U.S.-Iran deal that resulted in lower yields and a weaker dollar, both of which bolstered the demand for the yellow metal.
At 7.04 AM ET, gold futures (June) were up 0.4% at $4,841, after losing about 3.8% over the past month. Meanwhile, spot gold rose 0.6% to around $4,817 per ounce, after having lost nearly 7% since the U.S.-Iran war began in February.
Even as rising energy prices fuel inflation, typically boosting gold’s appeal as a hedge, the fear of persistently high interest rates is limiting demand for the metal.
Dollar Edges Lower
The U.S. dollar is hovering near its lowest level since early March, with the U.S. Dollar Index (DXY) at 98.15 as of 7:18 AM ET, as easing concerns over the Middle East tension have dampened the appeal for its safe-haven status.
President Donald Trump said on Wednesday that the Iran war is “very close to over,” raising investors’ hopes that the war could be nearing an end, as a key Pakistani mediator arrived in Tehran and the Trump administration expressed hope for a deal that would reopen the critical Strait of Hormuz.
Treasury Yields Fall
The 10-year Treasury yields dropped to 4.28% on early Thursday from the closing of 4.29% on Wednesday.
OANDA analyst Kelvin Wong told Reuters that growing hopes around a potential U.S.-Iran ceasefire is weighing on long-term bond yields and is reducing the relative cost of investing in non-yielding assets like gold and silver, pushing the yellow metal higher.
“If we start to see a break above $4,900, further potential upside cannot be ruled out towards the next intermediate resistance zone, which is at the psychological level of $5,000,” Wong told the publication.
Meanwhile, economist Justin Wolfers, on Tuesday, highlighted on X, that “Gold has no inherent value. It’s a shiny rock… people buy gold because they think other people value gold, and that’s a self-sustaining equilibrium.”
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