Gold prices today increased sharply. Recorded at 4:50 PM (Vietnam time), spot world gold prices were at 4,566 USD/ounce. The gold market was supported after US President Donald Trump said that Washington and Tehran had "mainly completed negotiations" on a memorandum of understanding towards a peace agreement, paving the way for the reopening of the strategic maritime route of Hormuz.
According to Mr. Tim Waterer - Market Analysis Director of KCM Trade - the prospect of reaching an agreement with Iran has put pressure on oil prices, while creating favorable conditions for gold from an inflationary perspective.
The market expects the reopening of the Strait of Hormuz to help stabilize oil supply, reduce energy price pressure and support gold," said Tim Waterer.
US Secretary of State Marco Rubio on May 25 affirmed that Washington will reach "a good agreement" with Iran, or will handle the issue in a "different way".
Meanwhile, the USD continued to fluctuate near its lowest level in a week, making gold more attractive to investors holding other currencies.
World oil prices also fell to their lowest level in two weeks. This development significantly affected inflation expectations, as high energy prices often caused prolonged inflationary pressure and forced central banks to maintain high interest rates for longer.
Gold is considered a safe haven from inflation, but a high interest rate environment is detrimental to precious metals because it does not bring yields.
The market also closely monitored US monetary policy after Mr. Kevin Warsh officially sworn in as Chairman of the US Federal Reserve (Fed) on May 23, amid rising gasoline prices due to Iranian tensions that had increased inflationary pressure and affected US consumer sentiment.
On other precious metals markets, spot silver prices rose 3.1% to $77.79/ounce. Platinum rose 2.3% to $1,966.59/ounce, while palladium rose 2.7% to $1,384.7/ounce.
