Gold prices rose by more than 1 percent in early trading on Thursday, recovering from losses recorded in the previous session as declining oil prices eased inflation concerns and improved investor sentiment toward the precious metal.
Spot gold increased by 1.4 percent to US$4,316.42 per ounce as of 0242 GMT, after falling 1.7 percent on Wednesday. Meanwhile, U.S. gold futures for August delivery were trading at US$4,336.70 per ounce.
Market analysts attributed the rebound largely to short-covering activity following the sharp decline in gold prices during the previous session, combined with positive developments in the Middle East that triggered a drop in oil prices.
According to Kelvin Wong, Senior Market Analyst at OANDA, investors moved to close short positions in gold after the previous day’s decline, while lower oil prices helped improve the outlook for inflation.
The movement came after the United States and Iran released details of an interim agreement aimed at extending the current ceasefire and creating space for negotiations on a broader settlement. Despite the agreement, U.S. President Donald Trump warned that military action could resume if Iran failed to comply with its commitments.
The 14-point agreement extends the ceasefire by an additional 60 days to facilitate discussions on a permanent resolution.
Oil prices also moved lower following the announcement, reversing gains made on Wednesday after concerns over potential renewed military action in the region.
Analysts note that lower oil prices generally reduce inflationary pressures, which can influence expectations regarding future interest rate decisions by central banks.
At the same time, market participants continue to monitor the outlook for U.S. monetary policy. According to projections released by the U.S. Federal Reserve, nine of its nineteen policymakers now expect interest rates may need to be increased later this year, despite the central bank maintaining its policy rate within the current 3.50–3.75 percent range.
Data from the CME FedWatch Tool showed that traders are increasingly anticipating a possible rate hike by December.
Among other precious metals, spot silver gained 1.8 percent to US$69.18 per ounce, platinum rose 1.2 percent to US$1,757.53 per ounce, while palladium advanced 1.3 percent to US$1,329.99 per ounce.
Market observers say gold prices are likely to remain sensitive to developments in global interest rates, inflation expectations, and geopolitical events in the coming weeks.
Source: Reuters
