Gold Surges Amid Middle East Truce Developments, Focus Shifts to Fed Rate Decisions

Gold prices experienced a slight uptick as the dollar weakened, with investors closely monitoring the tensions between Israel and Iran for signs of potential conflict escalation while seeking clearer insights on the Federal Reserve’s interest rate direction.

Bullion was trading around $3,340 per ounce after a modest rise on Wednesday, bolstered by a falling US dollar that made gold more accessible for various buyers. Other precious metals also saw notable increases. Palladium jumped over 5% before giving back some of its gains, while platinum rose nearly 3% to its highest level in over a decade.

President Donald Trump announced a meeting is scheduled between US and Iranian officials next week and stated that the hostilities between Israel and Tehran are virtually finished, but he warned that fighting “could maybe start soon.”

Fed Chair Jerome Powell mentioned that the central bank is still evaluating the impacts of Trump’s tariffs on consumer prices. Observations of muted inflation may lead the Fed to implement monetary easing sooner than expected, which would be advantageous for gold, a non-yielding asset. Displeased with the Fed’s conservative approach to rate cuts, Trump is reportedly considering appointing a new chair to replace Powell by September or October, according to the Wall Street Journal.

The significant rally that has driven gold prices up by over a quarter this year has lost steam recently, as trade tensions have eased and investors seem hesitant to participate at these high levels. Strong demand from central banks and expectations for rate cuts have also supported bullion, which is approximately $160 away from its all-time peak.

As of 11:38 a.m. in Singapore, gold had risen by 0.2% to $3,337.92 per ounce, following a 0.3% increase on Wednesday. The Bloomberg Dollar Spot Index declined by 0.3%. Silver saw a gain of 0.3%.

© 2025 Bloomberg

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