Key Takeaways

• Gold jumps sharply: Spot gold rose 2.2% to $4,311.64 per ounce, while gold futures also gained 2.2% to $4,332.75.
• Extends recovery from multi-month lows: Bullion continues to rebound from last week’s near-$4,000 trough.
• U.S.-Iran peace framework announced: Both sides confirmed a deal Sunday to halt hostilities, end the U.S. blockade, and reopen the Strait of Hormuz.
• Switzerland signing Friday: Pakistani Prime Minister Shehbaz Sharif confirmed the agreement will be formally signed in Switzerland this Friday.
• Brent crashes 4%: Crude fell to around $84 per barrel as traders priced in the return of Gulf oil flows.
• Dollar falls: The DXY slipped 0.2% as safe-haven demand for the greenback eased.
• Gold’s unusual war dynamic resolved: The conflict had paradoxically weighed on gold by stoking inflation fears and rate hike bets — both now unwinding.
• December Fed hike odds halved: Probability of a Fed rate increase by year-end fell to 49% from 69% a week ago, per CME FedWatch.
• Fed meeting June 16-17: Rates widely expected to hold; updated economic projections will be closely watched.
• BOJ to hike to 1%: The Bank of Japan is expected to raise rates this week.
• BOE to hold: The Bank of England is widely seen standing pat.
• Silver surges 3.1%: To $70.09 per ounce.
• Platinum climbs 2.6%: To $1,775.60 per ounce.
• Copper advances: LME copper edged up 0.6% to $13,788.33 per ton; U.S. copper futures rose 1%.

Gold prices jumped more than 2% on Monday after the United States and Iran agreed to an interim peace deal aimed at ending the Middle East conflict, sending oil prices tumbling and easing some concerns about inflation and higher interest rates.

Spot gold rose 2.2% to $4,311.64 an ounce by 03:08 ET (07:08 GMT), while U.S. gold futures expiring in August also advanced 2.2% to $4,332.75 per ounce.

The gains extended a rebound from last week’s multi-month lows near $4,000 per ounce.

U.S. and Iran Reach Peace Deal to Reopen Hormuz

U.S. and Iranian officials said on Sunday they had reached a peace framework that would halt hostilities, end the U.S. blockade of Iran, and reopen the Strait of Hormuz — a critical artery for global oil shipments.

Pakistani Prime Minister Shehbaz Sharif said the agreement would be formally signed in Switzerland on Friday.

The announcement triggered a sharp decline in crude prices, with Brent crude falling more than 4% to around $84 a barrel as traders priced in the return of Gulf oil flows and reduced risks of supply disruptions.

The U.S. dollar also fell against a basket of major currencies, with the U.S. Dollar Index last down 0.2%.

Gold has been under pressure for much of the conflict despite its traditional status as a safe-haven asset. The war had driven oil prices sharply higher, fueling inflation concerns and prompting investors to anticipate higher interest rates for longer. Those expectations boosted the dollar and Treasury yields, reducing the appeal of non-yielding bullion.

Fed, BOJ Rate Decisions Loom

Market expectations for further U.S. monetary tightening eased following the peace announcement.

Traders now see a 49% probability of a Federal Reserve rate increase by December — down from 69% a week earlier — according to the CME FedWatch tool.

Investors are now looking ahead to the Fed’s June 16-17 policy meeting, where policymakers are widely expected to leave rates unchanged while providing updated economic projections.

Elsewhere this week, the Bank of Japan is expected to raise interest rates to 1%, while the Bank of England is widely seen standing pat.

Among other precious metals, silver prices rose 3.1% to $70.09 per ounce, while platinum climbed 2.6% to $1,775.60 per ounce.

Benchmark copper futures on the London Metal Exchange edged up 0.6% to $13,788.33 a ton, while U.S. copper futures rose 1% to $6.51 a pound.