Precious Metals After Hours: Gold Price Rebounds Over 1% to Retake $4,000 Amid U.S.-Iran Ceasefire Hopes

Markets are increasingly optimistic that the United States and Iran may restart diplomatic negotiations, potentially de-escalating tensions in the Middle East. This optimism drove international gold prices to rebound over 1% on Tuesday (21st).

Analysts noted that if ceasefire talks make progress, it could ease energy supply constraints, suppress oil prices and inflationary pressures, thereby reducing market concerns about the U.S. Federal Reserve adopting a more hawkish monetary policy. However, with interest rate hikes still expected to remain high, gold prices may continue to trade in a range in the short term.

Spot gold rose 1.6%, closing at $4,068.29 per ounce. August COMEX gold futures gained 1.5%, settling at $4,076.40 per ounce, both reclaiming the key $4,000 psychological level.

Edward Meir, analyst at Marex, said that market expectations for a potential ceasefire in the Middle East have lifted not only gold but also broader commodity prices. Additionally, gold’s breakout from a short-term downtrend that began on July 6 attracted technical buying, supporting the rebound. However, he expects gold to remain range-bound in the near term.

According to Reuters, a senior Iranian official revealed that Tehran has received a 10-day ceasefire proposal from mediators, aimed at salvaging a temporary agreement reached last month. Markets believe that if the U.S. and Iran return to negotiations, it could reduce the risk of energy transport disruptions through the Strait of Hormuz and calm recent oil price volatility.

Recent Middle East conflicts had pushed oil prices higher, raising concerns that energy costs could reignite inflation. This, in turn, increased the likelihood that the Fed would maintain high interest rates or even raise them further. Since gold does not generate interest, a high-interest-rate environment increases the opportunity cost of holding gold. Thus, despite gold’s inflation-hedging and safe-haven properties, high rates may limit its upside potential.

Investors are now focusing on the Federal Reserve’s two-day monetary policy meeting next week and Chairman Kevin Warsh’s post-meeting remarks. According to the CME FedWatch Tool, markets currently estimate a 68% probability of a rate hike in September, indicating broad expectations for a hawkish monetary policy stance.

Commerzbank noted that $4,000 per ounce has become a key psychological support level for gold prices. However, as long as U.S. interest rates remain elevated, the rebound in gold prices may be suppressed. The bank emphasized the need to closely monitor upcoming inflation data and Fed policy signals.

Other precious metals also strengthened. Spot silver surged 4.1% to $58.72 per ounce, platinum rose 1.9% to $1,623.63, and palladium gained 2.4% to $1,282.25, reflecting improved market risk appetite and a broad-based rebound across the precious metals market.