Gold prices edged higher on Tuesday as the U.S. dollar weakened, bolstered by growing optimism over a potential Iran nuclear deal that could alleviate global oil and inflationary pressures. Spot gold rose 0.3% to $1,835 per ounce, extending gains for the second consecutive session amid a broader shift in market sentiment.
Analysts attribute the uptick in gold to a combination of factors, including a softer dollar and renewed hopes for a diplomatic resolution to the Iran nuclear standoff. A successful agreement could increase Iranian oil exports, easing global energy costs and reducing inflationary pressures. “The dollar’s pullback and potential Iran deal progress are giving gold a lift,” said a market analyst, who requested anonymity. “Lower inflation expectations make non-yielding assets like gold more attractive.”
The U.S. dollar index, which measures the greenback against a basket of six major currencies, dipped 0.2% on Tuesday, further supporting gold prices. A weaker dollar makes gold cheaper for holders of other currencies, boosting demand. Meanwhile, oil prices retreated slightly amid expectations of increased supply if Iran resumes exports under a new deal.
Market participants are also closely monitoring the Federal Reserve’s signals on interest rates. Despite recent hawkish tones, some investors believe the Fed may slow its pace of rate hikes if inflation moderates, which could benefit gold. “The Fed’s next move remains uncertain, but any signs of dovishness could further support gold,” the analyst added.
Looking ahead, gold’s trajectory will likely depend on developments in the Iran negotiations and the Fed’s monetary policy stance. While optimism around a deal offers short-term support, geopolitical risks and inflation dynamics will continue to drive market sentiment.