By: Economy Middle East

Gold prices advanced on Thursday, rebounding from losses recorded in the previous session as markets reacted positively to the signing of an interim peace agreement between the United States and Iran, while also assessing the Federal Reserve’s indication that interest rates could rise later this year.

As of 4:34 GMT, spot gold climbed 1.37 percent to $4,316.05 per ounce, although U.S. gold futures edged down 1.02 percent to $4,336.70.

In the UAE, gold rates rallied, with 24-carat gold gaining AED11 to AED519.25 and 22-carat gold rising AED10 to AED480.75.

In addition, 21-carat gold edged AED9.75 higher to AED461, while 18-carat gold inched up AED8.25 to AED395.

Meanwhile, 14-carat gold rose AED6.5 to AED308.25.

Bullion rises on easing tensions in the Middle East

Gold prices had dropped 1.7 percent on Wednesday, pressured by a stronger U.S. dollar and higher Treasury yields after the Fed’s latest monetary policy announcement.

Bullion received support from growing optimism over the U.S.-Iran agreement, which is expected to ease geopolitical tensions in the Middle East and facilitate the reopening of critical energy export corridors.

The 14-point memorandum initiates a 60-day negotiation process, during which Iran has agreed to permit toll-free transit through the Strait of Hormuz. Under the terms of the deal, shipping traffic through the strategic waterway is expected to return to full capacity within 30 days.

The deal has helped alleviate concerns about a sustained disruption to global oil supplies, easing fears of energy-driven inflation and reinforcing gold’s appeal as a hedge within investment portfolios.

Fed rate decision weighs on gold as policymakers expect one hike in 2026
The surge in gold prices was capped after the Federal Reserve left interest rates unchanged at 3.50-3.75 percent on Wednesday, while indicating that further policy tightening remains possible later this year.

The central bank’s updated projections revealed that nine of the 19 policymakers anticipate at least one rate hike in 2026, a notable shift from earlier expectations. Presiding over his first policy meeting as Fed chair, Kevin Warsh reiterated the Fed’s focus on combating inflation and underscored its commitment to achieving price stability.

The Fed also revised its inflation outlook higher, leading investors to reduce expectations for future rate cuts and providing support to the U.S. dollar.

A stronger dollar tends to weigh on gold by making the metal more expensive for holders of other currencies, while elevated interest rates raise the opportunity cost of owning non-yielding assets such as bullion.

Further limiting gains in gold prices, the U.S. dollar index edged up 0.16 percent on Thursday, extending gains after surging 0.6 percent in the previous session following the Fed’s policy announcement.

Other precious metals

As gold prices rose, the broader precious metals market advanced. Spot silver climbed 1.70 percent to $69.069 per ounce, while platinum advanced 1.39 percent to $1,764.54 per ounce and palladium gained 0.79 percent to $1,337.