Gold prices were largely steady on Tuesday after rising to a more than one-week high in the previous session, as investors awaited further details on a preliminary peace deal between the US and Iran. The agreement, announced by President Donald Trump, aims to extend a tenuous ceasefire agreed upon in April by another 60 days and reopen the Strait of Hormuz, which Iran had effectively blocked since the US and Israel attacked Iran in February. Brent crude futures dropped below $80 a barrel after the announcement.
Optimism surrounding the peace deal eased expectations for a Federal Reserve interest rate hike later this year, causing short-term interest rates and energy prices to come down. Markets have pared back expectations for a Fed rate hike in December to 58% from around 70% previously, according to the CME FedWatch tool. Non-yielding gold typically performs better when the opportunity cost of holding it falls, making the prospect of fewer rate hikes supportive for prices.
Citi raised its 0-3 month gold price forecast by $500 to $4,500 per ounce, citing that risk sentiment is likely to turn higher more broadly. Spot gold was up 0.8% at $4,338.97 an ounce, while US gold futures added 0.1% to settle at $4,354.40. Investors are now awaiting the Federal Reserve's policy decision and remarks on Wednesday, the first under new Chair Kevin Warsh, with rates widely expected to remain unchanged.
Other precious metals also saw movement: spot silver rose 0.7% to $70.51 per ounce, platinum gained 2.7% to $1,812.76, and palladium climbed 0.9% to $1,360.75. India's silver imports plunged 87% in May from a year earlier to their lowest level in over three years due to tightened curbs. Singapore announced plans to establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services to become a gold trading hub.
