Gold rose early Friday, reclaiming its place near the $4200 an ounce mark, after U.S. President Donald Trump said that the country was close to a possible peace deal with Iran, though the yellow metal still looks headed for a weekly loss on inflation fears and speculation that the Federal Reserve may have to raise interest rates.
Trump claimed Thursday that the U.S. has “ended the war with Iran,” though there has been no confirmation from Tehran. The yellow metal has risen on talks of a possible peace over the past few months and fallen on hawkish news about the war.
The conflict has driven up the price of U.S. goods, sending annual inflation as measured by the consumer price index to the highest level in more than three years in May data released Wednesday. The report spurred talks about a possible Fed interest rate hike. The European Central Bank on Thursday became the first major monetary authority to increase interest rates since the start of the war. It was the first ECB rate hike since 2023.
August gold futures dropped 0.5% Thursday to settle at $4,114.00 an ounce on Comex, and the most-active contract fell 5.8% in the first four days of the week. Bullion dropped 0.8% in May after losing 1% in April and sliding 11% in March. It rallied 64% last year. The August contract is currently up $94.10 (+2.29%) an ounce to $4208.10 and the DG spot price is $4199.30.
Trump said Iran’s supreme leader had agreed to the framework of an accord, though Tehran remained silent.
But inflation has outpaced wages for a second straight month, according to data released this week. Bets on a Fed interest rate hike this year future increased after a blowout U.S. monthly jobs report for May, which came out last Friday. Fed policymakers watch both inflation and the labor market when setting monetary policy.
Wholesale prices for May, as measured by the producer price index, which came out Thursday, reached the highest level since November 2022 on an annual basis.
Over 96% of all the investors tracked by the CME FedWatch Tool are betting on rates staying unchanged at the next Fed policy meeting next week, but most anticipate a rate hike before the end of the year. The Fed has kept interest rates unchanged this year after three previous rate cuts. The Fed in April held interest rates steady at 3.5% to 3.75%, as expected, but policymakers were unusually divided. The June 16-17 meeting of Fed policymakers will be the first under new Chair Kevin Warsh.
Front-month silver futures rose 2.9% Thursday to settle at $66.59 an ounce on Comex, though the July contract declined 3.6% so far this week. The most-active contract touched a record above $115 in January. Silver gained 2.5% in May after losing 1.2% in April and dropping 20% in March. It rose 141% last year. The July contract is currently up $2.494 (+3.90%) an ounce to $66.495 and the DG spot price is $66.85.
Spot palladium rose 1.4% Thursday to $1,258.50 an ounce and is up 0.4% in the first four days of the week. Palladium fell 12% last month after rising 3.2% in April and tumbling 17% in March. Palladium rose 74% last year. Currently, the DG spot price is up $43.40 an ounce to $1291.00.
Spot platinum edged up 50 cents Thursday to $1,690.40 an ounce but has lost 6% so far this week. Platinum dropped 3.2% he DG spot price is currently up $48.70 an ounce to $1717.40.
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