Gold and silver rally on weaker dollar, US-Iran peace hopes
What's the story
Gold prices rose on Friday, continuing their weekly upward trend. The rise comes as concerns over inflation ease and the US dollar weakens. Hopes for a potential diplomatic breakthrough between the US and Iran have also boosted demand for bullion. Investors are now looking at key US jobs data for more clues on interest rates, which could further impact gold prices.
Price increase
Precious metals extend gains
As of early trade on Friday, COMEX gold was trading at $4,722.2 per ounce, a 0.24% increase. Meanwhile, COMEX silver rose by 0.44% to $80.535 during the same period. The spot gold price has also increased by nearly 2% this week alone, further indicating the positive trend in precious metal markets amid changing global economic conditions and geopolitical tensions.
Diplomatic influence
US-Iran negotiations support bullion prices
The ongoing US-Iran negotiations have continued to support bullion prices, even after renewed hostilities on Thursday. The exchange of fire was the biggest challenge to a month-long ceasefire but both sides later indicated they did not want further escalation. Reports of a possible reopening arrangement for the Strait of Hormuz were seen as signs that diplomatic engagement was continuing, easing fears over prolonged supply disruptions and inflationary pressures.
Market dynamics
A weaker dollar supports precious metals
A weaker dollar has also supported precious metals, making gold cheaper for holders of other currencies. Kaynat Chainwala, AVP Commodity Research at Kotak Securities, said COMEX gold extended gains as optimism over a potential US-Iran understanding improved the outlook for bullion. She added that if Friday's official jobs report confirms signs of a cooling labor market, expectations for Federal Reserve rate cuts could strengthen further, providing an additional boost to non-yielding assets like gold and silver.
Global trends
Global central bank demand for gold continues
Official data has shown that China's central bank added gold to its reserves for the 18th consecutive month in April. This highlights continued central bank demand for bullion globally, further supporting the positive trend in precious metal markets. Jateen Trivedi, VP Research Analyst at LKP Securities, said gold remained positive amid improving global sentiment and softer commodity prices as markets anticipate a constructive outcome in the coming days.