Gold Soars, US-Iran Deal Opens New Hope
Gold prices strengthened after the United States and Iran announced an agreement to end the conflict and reopen the Strait of Hormuz. First, the market views this agreement as a significant catalyst as it could mitigate the risk of global energy disruptions. Gold briefly rose 2.1% to above US$4,300/oz, before settling at US$4,291.26/oz on Monday (June 15).
Second, the agreement was announced by US President Donald Trump via social media, declaring the "deal" with Iran complete. Iran's Deputy Foreign Minister also confirmed the agreement and stated that the signing would take place on Friday. The main points of the agreement include a commitment by both parties not to attack each other, the reopening of the Strait of Hormuz, and the start of negotiations to dismantle Tehran's nuclear program.
Third, the opening of Hormuz is a crucial factor for commodity markets. This route is a key global energy route, and its disruption during the conflict has driven up oil prices and heightened inflationary pressures. Following news of the deal, Brent fell nearly 4% as the market expected energy flows from the Gulf region to gradually return to normal.
Fourth, for gold, falling oil prices could ease inflation concerns and ease expectations of interest rate hikes. This is important because high interest rates typically put pressure on non-yielding gold. However, despite its strengthening, gold is still down nearly 20% since the conflict began in late February, as the market had previously focused more on energy inflation and the risk of central bank tightening.
Fifth, market focus has now shifted to central bank decisions this week, particularly the Federal Reserve under new Chairman Kevin Warsh. Market expectations still point to the possibility of an interest rate hike by the end of the year. Therefore, gold's current rally still needs confirmation by two factors: the implementation of the US-Iran deal and whether the Fed remains hawkish. If Hormuz is indeed opened and oil continues to fall, inflationary pressures could ease and provide more room for gold's recovery. (asd)*
Source: Newsmaker.id
