Gold Prices Edge Higher as Oil Retreats and Inflation Concerns Ease Amid U.S.-Iran Peace Talks
Gold prices moved slightly higher on Thursday as crude oil prices softened amid reports of ongoing U.S.-Iran peace negotiations, helping ease concerns over energy-driven inflation and the prospect of further central bank interest rate hikes.
Investors continue to monitor geopolitical developments in the Middle East, with signs of diplomatic progress between Washington and Tehran reducing demand for traditional safe-haven assets.
As of 16:29 WIB, spot gold rose 0.2% to $4,079.70 per troy ounce, recovering from its lowest level in more than six months reached earlier in the session. Meanwhile, gold futures declined 0.8% to $4,100.65 per troy ounce.
U.S.-Iran Negotiations Offer Hope for De-escalation
According to reports, the United States and Iran continued discussions on a potential peace agreement overnight despite both sides exchanging retaliatory airstrikes for a second consecutive day.
Sources cited by Reuters indicated that Washington and Tehran are negotiating a preliminary framework that could include mechanisms to release frozen Iranian assets. Efforts to secure a diplomatic breakthrough have reportedly intensified in recent days.
However, uncertainty remains elevated. U.S. President Donald Trump warned that additional actions could be taken against Iran if the country fails to accept a peace agreement in the near future.
Military Escalation Continues Despite Diplomatic Efforts
The U.S. Central Command (CENTCOM) confirmed that American forces struck several military targets in Iran late Wednesday and early Thursday, describing the operation as an act of self-defense following the downing of a U.S. helicopter near the Strait of Hormuz earlier this week.
Iran responded with attacks targeting several U.S. and allied military installations across the Gulf region. Unconfirmed media reports suggested explosions were heard in Kuwait, Bahrain, and Jordan. Tehran also claimed to have blocked all maritime traffic through the Strait of Hormuz, although CENTCOM rejected those claims.
The latest escalation follows two weeks of military exchanges between the United States and Iran amid broader regional tensions. Iran has also been involved in ongoing hostilities with Israel related to Israel's operations against Iran-backed Hezbollah forces in Lebanon.
Oil Prices Pull Back, Reducing Inflation Fears
Global benchmark Brent crude futures edged lower on Thursday, giving back part of the gains recorded after recent military strikes. Although oil prices remain significantly above pre-conflict levels, they have retreated from recent highs.
Rising crude oil costs have fueled concerns that inflation could accelerate, potentially prompting major central banks, including the U.S. Federal Reserve and the European Central Bank (ECB), to maintain a tighter monetary policy stance.
Higher interest rates are generally viewed as negative for gold because the precious metal does not generate interest income.
Markets Await Key U.S. Inflation Data
Economic data released on Wednesday showed U.S. consumer prices rising at the fastest pace in years, largely driven by higher gasoline prices. Investors are now awaiting U.S. Producer Price Index (PPI) data for additional clues about inflation trends.
Market expectations currently suggest that the Federal Reserve could raise borrowing costs before the end of 2026, according to the CME FedWatch Tool. Meanwhile, the ECB is widely expected to deliver another interest rate increase at the conclusion of its two-day policy meeting as officials continue efforts to curb inflation across the Eurozone.
Stronger U.S. Dollar Limits Gold's Upside
The U.S. dollar has strengthened since the conflict intensified in late February, making gold more expensive for overseas buyers and limiting potential gains in bullion prices.
On Thursday, the U.S. Dollar Index was last trading 0.1% higher at 100.09, adding further pressure on precious metals markets.
Gold Outlook
Gold prices remain caught between competing forces. While geopolitical tensions continue to support safe-haven demand, easing oil prices, a stronger U.S. dollar, and expectations of higher interest rates may limit further upside in the near term. Investors will closely monitor developments in U.S.-Iran negotiations and upcoming inflation data for fresh direction.