Spot gold rose 0.6% to $4,816.14 per ounce as of 9:00 a.m. ET (1300 GMT), after hitting a one-month high in the previous session. U.S. gold futures for June delivery gained 0.3% to $4,838.10.
As war tensions continue to de-escalate, inflationary pressures have eased, increasing the prospects of Federal Reserve rate cuts later this year and supporting demand for the non-yielding metal, said David Meger, director of metals trading at High Ridge Futures. Optimism grew that the Iran war may be near an end, with a key Pakistani mediator having made a breakthrough on “sticky issues”, a source said, although Iran warned that the fate of its nuclear program had not been resolved.
Gold prices initially fell when the U.S. and Israel launched the war on Iran in late February, with liquidity pressures and inflation concerns as energy prices soared prompting markets to dial back expectations of interest rate cuts. As a zero-yielding asset, gold tends to lose appeal when interest rates are high.
Currently, traders see a 36% chance of a U.S. interest rate cut this year. U.S. Treasury Secretary Scott Bessent said that the economy will be slower this quarter amid the Iran war, but it is in good shape and will rebound, adding that oil prices do not appear to be weighing on inflation expectations.
Among other metals, spot silver rose 0.3% to $79.27 per ounce. The silver market is heading for a sixth year of structural deficit, with 762 million troy ounces drawn from stocks since 2021, raising the risk of a renewed liquidity squeeze despite weaker demand expectations, the Silver Institute and consultancy Metals Focus said on Wednesday.
Platinum added 0.9% to $2,129.55 and palladium was up 0.3% at $1,578.06.