Gold pulls back after Iran deal rally as Fed holds firm

Gold fell to around $4,209 on Thursday after rallying above $4,300 earlier this week when the US-Iran framework agreement weakened the dollar.tradingeconomics+1
President Trump signed the preliminary deal at the Palace of Versailles during a G7 dinner, calling for the Strait of Hormuz to reopen immediately.cnn+1
Barclays maintained its forecast that gold would reach $4,791 by year-end, citing expected central bank buying and dollar weakness.kitco

Gold prices surged above $4,300 per ounce earlier this week as the US-Iran peace agreement reduced the dollar's safe-haven appeal, making the precious metal more attractive to foreign buyers. Spot gold climbed as high as $4,365 on Monday, its highest level in more than a week, before settling around $4,315 on Tuesday as markets awaited further details on the deal.reuters+1

Iran Deal Triggers Dollar Decline

The US Dollar Index dropped to a 10-day low near 99.38 on Monday after the United States and Iran announced a framework agreement to end their war and reopen the Strait of Hormuz. The weakening greenback provided a tailwind for gold, which is priced in dollars and becomes cheaper for holders of other currencies when the dollar declines.newsmaker.id+1

President Donald Trump formally signed the preliminary agreement on Tuesday evening at the Palace of Versailles during a G7 dinner hosted by French President Emmanuel Macron. The memorandum of understanding calls for the immediate reopening of the Strait of Hormuz without tolls and proposes phased sanctions relief for Iran contingent on compliance, according to Axios, citing a diplomat from an intermediary nation.cnn+2

Fed Stance Limits Upside

Despite the gold rally, gains remained capped by expectations that the Federal Reserve would maintain its hawkish posture. The Fed, under Chair Kevin Warsh, held rates steady at its meeting on Wednesday, with market pricing suggesting no rate cuts this year. Edward Meir, an analyst at Marex, told Reuters that if Warsh adopted "a more hawkish stance on interest rates, gold may face some downward pressure".CNBC

By Thursday, gold had retreated to around $4,209, falling 1.18% from the previous day, according to Trading Economics. Analysts attributed the pullback to lingering uncertainty about the deal's implementation and the Fed's firm stance on rates.tradingeconomics

Broader Context

Gold hit a record $5,595 per ounce in January before falling 25% during the Iran war as rising oil prices stoked inflation fears and rate-hike expectations. Barclays maintained its forecast that gold would reach $4,791 by year-end, citing expectations of renewed central bank buying and a return to dollar weakness now that the conflict appears to be winding down.kitco+1

Sources (29)