Gold Prices Rebound Over 1% as Dollar and Oil Retreat on Easing Mideast Tensions

Gold prices rose more than 1% on Thursday, rebounding from a one-week low as an easing U.S. dollar and falling crude oil prices bolstered the precious metal. The move reversed Wednesday's losses, which were driven by a flight to the dollar amid escalating military exchanges between the United States and Iran.

By the close of trading, spot gold was up 1.2% to $4,124.36 per ounce, while gold futures settled 1.2% higher at $4,133.17 per ounce, according to data from Investing.com. A weaker dollar makes gold, which is priced in the U.S. currency, more attractive to international buyers.

Geopolitical Tensions Subside

The primary catalyst for the market shift was a change in tone regarding the conflict between Washington and Tehran. Oil prices, which had hit a three-week high, retreated after U.S. President Donald Trump told reporters that Iran had made contact and wanted "to make a deal so badly."

These comments appeared to calm investor fears of a wider conflict that could disrupt global energy supplies. The situation had intensified earlier in the week after the U.S. military launched strikes against approximately 170 targets in Iran in retaliation for attacks on commercial oil tankers, prompting a response from Iranian armed forces against U.S. bases in the region, according to state media.

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Focus Returns to Fed Policy

With immediate inflation fears from surging oil prices receding, investors also reassessed the outlook for U.S. monetary policy. Minutes from the Federal Reserve's June 16-17 meeting, released Wednesday, revealed a divided committee on the path for interest rates.

While some Federal Open Market Committee (FOMC) members argued for an immediate rate hike, the minutes showed most participants believed inflation could either return to the Fed's 2% target on its own or remain elevated due to other factors. A less aggressive stance on interest rates is typically bullish for non-yielding gold, as it lowers the opportunity cost of holding the asset. Underscoring this view, New York Fed President John Williams said Thursday he did not anticipate a sustained rise in energy prices.