Key Takeaways
- Precious metal climbed 0.2% Friday to approximately $4,220 per ounce while facing a second consecutive weekly decline
- Emerging U.S.-Iran agreement could restore Strait of Hormuz operations and eliminate oil sanctions
- Brent crude dropped more than 4% following Trump’s announcement of potential peace breakthrough
- European Central Bank implemented its first rate increase in almost three years due to conflict-fueled inflation
- UBS revised Fed rate cut expectations to 2027, creating headwinds for gold investment demand
Bullion markets stabilized Friday while still poised for weekly losses as market participants monitored developments surrounding potential diplomatic breakthrough between Washington and Tehran.
Spot bullion advanced 0.3% to approximately $4,224 per ounce during London market hours. While posting modest intraday gains, the precious metal has surrendered more than 2% across the trading week, marking its second consecutive weekly retreat.
According to Iran’s semi-official Mehr news outlet, Washington and Tehran are working through a comprehensive 14-point framework. The proposed terms encompass reopening the strategic Strait of Hormuz waterway, unfreezing $24 billion in Iranian financial assets, and establishing a 60-day timeframe for completing nuclear negotiations.
President Trump announced Thursday that Iran’s supreme leader had accepted a peace framework potentially ready for signatures this weekend. He characterized it as “a very strong memorandum of understanding that is a little bit conceptual.”
Tehran’s foreign ministry responded cautiously, stating the nation “has not yet reached a conclusion on this matter.” The proposed agreement requires additional review and formal approval from Iranian authorities.
Energy Markets React to Diplomatic Developments
Brent crude plummeted over 4% to $86.47 per barrel. It fell beneath the $90 threshold Thursday immediately after Trump’s public statements. Energy prices had surged earlier this year when the ongoing conflict, now entering its fourth month, interrupted critical supply routes through the Strait of Hormuz.
The military conflict has amplified worldwide inflation concerns. Declining energy costs could alleviate some inflationary pressures, although Brent continues trading significantly above pre-conflict benchmarks.
The European Central Bank executed a rate increase this week, marking its first such move in nearly three years. ECB President Christine Lagarde cautioned that conflict-related inflation is expanding beyond the energy sector.
Precious Metals Face Extended Headwinds
Financial markets have adopted a skeptical stance toward peace deal announcements. Ole Hansen, head of commodity strategy at Saxo Bank, noted investors have witnessed over 30 similar declarations in recent months.
“Forget what Trump says and focus instead on what the Iranians do,” Hansen stated.
Gold currently trades approximately 20% below pre-war levels from late February. The metal recently penetrated below its 200-day moving average, a significant technical indicator, triggering additional selling momentum earlier in the week.
Julius Baer reduced its 3-to-12-month bullion price projection from $4,500 to $4,250 per ounce. UBS revised its Federal Reserve rate cut forecast to 2027, diminishing anticipated gold ETF demand for 2026.
The Chicago Mercantile Exchange revealed plans to introduce continuous 24-hour, seven-day trading for its 1-ounce gold futures contract beginning July 26, responding to increasing demand for perpetual market access.
Silver declined 0.5% to $66.97 per ounce, while platinum and palladium registered gains.
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