Gold pushed higher after Israel and Lebanon agreed to a conditional ceasefire, a possible step toward resolving the wider Middle East conflict that’s upended global energy markets and raised inflation risks.
Bullion rose as much as 0.7% to near $4,465 an ounce, clawing back some of the previous session’s 1.2% decline as dip-buyers returned to the market. In a joint statement with the US, Israel and Lebanon said their deal was contingent on “a complete cessation” of fire from Iran-backed Hezbollah.
The agreement follows renewed fighting in the Middle East on Wednesday that marked the most serious flare-up since a ceasefire went into effect in April. Kuwait and Bahrain were caught in the crossfire as the strikes threatened to derail peace negotiations between the US and Iran.
While Washington and Tehran have agreed a rough framework to extend their ceasefire and reopen the Strait of Hormuz, a final agreement has proven elusive. US President Donald Trump said the key waterway would open “immediately” upon Iran signing a memorandum of understanding, but Tehran has balked at American peace terms.
The protracted disruption to energy flows via Hormuz has driven oil prices higher and raised concerns around global inflation, making central banks more likely to keep interest rates steady or even raise them — a headwind for precious metals, which don’t pay interest.
Bullion has moved largely in an inverse relationship with oil since the conflict began in late February. It fell sharply in the early days of the conflict and remains about 16% below its immediate pre-war level, though it has traded in a narrow range for the last few weeks. After three days of gains, oil slipped on news of the Israel-Lebanon deal.
For gold, hopes for an Israel-Lebanon ceasefire “have eased near-term pressure from yields and the dollar, while bullion’s pullback toward a long-term trend line is drawing dip-buyers back in,” said Hebe Chen, an analyst at Vantage Markets in Melbourne.
Without a more comprehensive resolution to the conflict, however, inflationary pressures are set to persist. Federal Reserve Bank of Dallas President Lorie Logan said officials may need to raise interest rates later this year to bring inflation back to the US central bank’s 2% target.
“As inflation concerns continue to see expectations of a Fed hike priced in by at least early 2027, gold is finding it hard to muster any serious recovery,” TD Securities analysts Ryan McKay and Bart Melek said in a note.
Spot gold was 0.2% higher at $4,446.50 an ounce as of 8:44 a.m. in Singapore. Silver gained 0.5% to $73.09 an ounce. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, slipped 0.1% after ending the previous session 0.3% higher.
This article was generated from an automated news agency feed without modifications to text.
