Gold prices surged more than 3% on Monday, reaching their highest level in more than a week after Iran and the United States agreed to halt the war, easing concerns about inflation and the prospect of higher interest rates. Spot gold rose 3.3% to $4,356.79 per ounce after touching its strongest level since June 5 earlier in the session. U.S. gold futures also gained 3.3% to $4,378.70, supported by a weaker dollar and falling Treasury yields.
The dollar index slipped 0.2%, helping make gold cheaper for buyers using other currencies. At the same time, oil prices dropped sharply after the two sides reached a framework deal to end the conflict and reopen the Strait of Hormuz, a vital shipping route. Although the agreement is still pending formal signing, it marked a major breakthrough in easing geopolitical tensions that had been weighing on financial markets.
Market participants said the easing of war risks has led traders to price out part of the rally that gold had been receiving from safe-haven demand. The decline in oil, Treasury yields and the dollar reduced some of the biggest cross-asset risks tied to inflation expectations. Gold, which does not pay interest, had been under pressure since the conflict began because higher energy prices raised the chance that the Federal Reserve would keep rates elevated or even raise them further.
Traders have also reduced the odds of a U.S. interest-rate hike in December. According to the CME FedWatch tool, the probability fell to 52.5% from nearly 70% last week after the peace framework was announced. That shift added support for bullion, which tends to benefit when rate expectations fall.
Investors are now focused on the Federal Reserve’s June 16–17 policy meeting, the first under Chair Kevin Warsh. Markets will be watching closely for signals about the future path of interest rates and whether policymakers see enough progress on inflation to avoid tighter policy. Analysts said Warsh’s tone and guidance could determine gold’s next major move, especially if the Fed signals a more cautious or dovish stance.
Elsewhere in the metals market, Singapore announced plans to set up an over-the-counter gold clearing system and provide central bank gold-vaulting services, according to its deputy prime minister. The move reflects continued institutional interest in gold infrastructure and could strengthen Singapore’s role as a regional bullion hub.
Overall, gold’s sharp rise reflected a combination of relief over easing Middle East tensions, a softer dollar, lower oil prices and expectations that the Federal Reserve may be less aggressive on rates than previously feared.
