Gold rallied sharply after the US and Iran announced an interim deal to end hostilities and reopen the Strait of Hormuz. President Trump confirmed the “toll free opening” of the strait, with signing expected Friday. The agreement includes a 60-day negotiation period on Iran’s nuclear program and sanctions relief on oil sales.
The move reverses some of the metal’s decline since the late February conflict began, as higher energy prices had fueled inflation and expectations of sustained or higher interest rates. The deal improves the macro backdrop for the non-yielding metal by easing inflationary pressures, though analysts caution choppy trading still lies ahead.
Trade analysis
Short-dated market on June gold close features active brackets at 3800, 4400 and 4800. Volatility now hinges on deal implementation and oil and yield moves, and the edge lies in gauging durability of de-escalation versus lingering hawkish policy risks.
Bullish (4400 or higher) signals:
- Formal signing and sustained Hormuz reopening lowering energy inflation
- Dovish signals from Warsh’s Fed meeting or softer yields
Bearish (3800 or lower) signals:
- Deal breakdown or stalled talks reigniting inflation fears
- Hawkish Fed reinforcing rate hike expectations
The strategy is to fade rallies and buy dips under 4400 while monitoring deal details and Fed signals. Our base case is a recovery toward 4500 into the month’s end if the interim deal holds.