Gold Edges Higher as Ceasefire Hopes Temper Geopolitical Fears
Gold prices edged slightly higher on Friday as investors balanced easing geopolitical tensions in the Middle East against lingering uncertainty over global inflation and the direction of interest rates.
Spot gold traded near the US$4,500 level, rising modestly to around US$4,514.59 per ounce after recovering from earlier market volatility.
Despite the daily gains, the precious metal remains under pressure compared to recent highs, having declined by about 2.3 per cent over the past month. However, gold prices are still significantly higher on a year-on-year basis, reflecting sustained investor demand for safe-haven assets amid global economic uncertainty.
Market sentiment was influenced largely by reports suggesting that the United States and Iran are exploring a possible ceasefire framework aimed at easing tensions in the Middle East.
According to market reports, the discussions could include a proposed 60-day extension of the ceasefire arrangement, renewed negotiations surrounding Iran’s nuclear programme, and broader efforts to stabilise the region, particularly around the Strait of Hormuz.
The Strait of Hormuz remains one of the world’s most critical oil shipping routes, handling a substantial share of global crude exports. Concerns over potential disruptions in the area had previously triggered sharp increases in oil prices and heightened fears of energy-driven inflation globally.
The latest ceasefire discussions have, however, helped ease some of those fears, reducing immediate concerns over supply disruptions and runaway energy costs.
Analysts say the moderation in oil-related inflation concerns has slightly weakened demand for gold as a defensive asset, while also reducing expectations of more aggressive monetary tightening by major central banks.
Still, uncertainty surrounding the negotiations continues to limit broader market optimism.
Reports indicate that US President Donald Trump has yet to formally approve the proposed terms of the arrangement, while US Vice President JD Vance has reportedly cautioned that discussions remain fragile and at an early stage.
Gold has experienced heightened volatility in recent months as investors react to shifting geopolitical risks, energy market developments and evolving expectations around US interest rates.
The metal had previously come under pressure following rising concerns over energy-driven inflation, which strengthened expectations that the US Federal Reserve could maintain tighter monetary policy for longer.
However, expectations that the Federal Reserve may keep interest rates largely unchanged this year have helped stabilise gold prices in recent weeks.
Market analysts say investors are likely to continue monitoring developments surrounding the US-Iran negotiations, oil market conditions and central bank policy signals for further direction in the gold market.
They note that while easing geopolitical tensions could reduce safe-haven demand temporarily, persistent uncertainty over inflation, global growth and financial market stability may continue to provide underlying support for bullion prices in the medium term.
