Gold surged over 1.50 percent on Friday as markets reacted to reports that the United States and Iran are nearing a deal to extend their ceasefire by 60 days, creating space for nuclear program negotiations. The XAU/USD pair rallied to $4,563 after recovering from intraday lows of $4,489, reflecting reduced geopolitical risk premium unwinding in precious metals markets.
The advance comes as Federal Reserve rate hike expectations continue to fade, providing additional support for non-yielding gold. Traders are closely monitoring the diplomatic breakthrough between Washington and Tehran, as a successful ceasefire extension could significantly alter safe-haven demand dynamics heading into next week. The combination of easing geopolitical tensions and dovish Fed sentiment has created a bullish environment for gold despite typically conflicting drivers.
Market participants including forex traders, commodity brokers, and institutional investors should watch for confirmation of the Iran-US deal and any Fed commentary that could impact rate expectations.
FXnCO Insight
Gold’s geopolitical premium may compress further if the ceasefire deal is formalized, potentially creating tactical shorting opportunities for risk-on traders.
Source: FXStreet