Gold recovers to $4,530 amid falling oil prices

Gold was up 0.7% to near $4,530 on Friday with XAUUSD extending its Thursday’s recovery move, as crude oil prices decline due to renewed hopes of a permanent peace deal between the United States and Iran. Late Friday, the benchmark WTI price traded 1.6% lower, hitting a fresh five-week low near $86.30. On Thursday, a report from Axios showed that the US and Iran had reached an agreement over a 60-day memorandum of understanding (MoU), which includes “unrestricted” energy flow through the Strait of Hormuz, a critical passage to almost 20% of world energy supply, and the removal of the US blockade on Iranian sea ports. However, the agreement still needs approval from US President Donald Trump. Gold has been underperforming in the past few months as higher oil prices due to Middle East conflicts fueled US inflation, which forced traders to price out the possibility of interest rate cuts by the Federal Reserve this year, with markets beginning to price in potential rate hikes by December. Higher-for-longer interest rate expectations reduce the appeal of non-yielding assets like gold. However, falling crude oil prices this week have reduced expectations for additional Fed tightening, with markets now pricing in a 44% chance of higher rates by December, down from nearly 62% a week earlier. Meanwhile, market experts are of the view that damage to Gulf energy infrastructure and the need to rebuild oil inventory would keep oil prices higher even as Middle East conflicts get resolved. Analysts at Goldman Sachs expect Brent and WTI to hold stable around $80 and $75 per barrel, respectively, throughout 2027. They note that inventory rebuilding and structural supply responses will offset downward pressure even if shipping chokepoints like the Strait of Hormuz reopen. The projected oil price will still be almost 30% higher than what was seen before the onset of the war. Also, President Trump’s refusal to approve the latest US-Iran framework could lead to fresh concerns over the price of gold. (Source: OANDA) The post Gold recovers to $4,530 amid falling oil prices appeared first on Financial Mirror.