Spot gold climbed in Asian trading on Thursday, reversing some of the losses seen in the previous session as markets responded to a newly signed U.S.-Iran interim memorandum. By 21:20 ET (01:20 GMT), spot bullion had risen 1.4% to $4,317.80 an ounce. U.S. Gold Futures, however, were down about 1% at $4,339.30.
Markets had pushed gold lower in the prior session, when the metal fell 1.7% amid a firmer U.S. dollar and rising Treasury yields that followed the Federal Reserve's recent policy announcement.
How the U.S.-Iran memorandum influenced markets
Optimism around the 14-point memorandum provided clear support for bullion. The agreement begins a 60-day negotiation period and includes provisions for toll-free passage through the Strait of Hormuz. Under the terms of the deal, traffic through the strait is to be restored to full capacity within 30 days.
That prospect helped reduce fears of a prolonged disruption to oil flows, tempering concern about energy-driven inflation and preserving bullion's role as a hedge for some investors. The easing of Middle East tensions was cited as a key factor in curbing expectations of an extended oil supply shock.
Monetary policy signals restrain upside
Despite the geopolitical relief, bullion's advance was capped following the Fed's decision to hold its policy rate at 3.50%-3.75% on Wednesday. The central bank signaled that policymakers see room for tighter monetary policy later this year. Updated projections showed that nine of 19 Fed officials expect at least one rate increase in 2026, a marked shift from expectations earlier this year.
The Fed also raised its inflation forecasts, prompting investors to pare back expectations for imminent rate cuts. That shift boosted the dollar, and a stronger greenback typically makes dollar-denominated gold more expensive for overseas buyers. Higher interest rates also raise the opportunity cost of holding non-yielding bullion, placing a natural limit on gains.
Market moves beyond gold
The U.S. Dollar Index notched a 0.2% increase on Thursday, after a 0.6% jump in the previous session following the Fed announcement. Other precious metals moved higher on Thursday as well: silver rose 2.4% to $69.54 per ounce, while platinum gained 1.4% to $1,765.60 per ounce.
Overall, market participants balanced eased geopolitical risk that favors commodities with monetary policy signals that support the dollar and bond yields, leading to mixed flows into precious metals.
Summary
Gold recovered some losses in Asian trading after the signing of a U.S.-Iran interim agreement reduced near-term oil supply concerns. But the Federal Reserve's outlook for potentially tighter policy later in the year limited the metal's advance, as a firmer dollar and higher yields weigh on non-yielding assets.