Gold Prices Rise as Investors React to Optimism Over Iran Nuclear Talks and Await Monetary Policy Guidance from the Federal Reserve

Gold Prices Surge as US-Iran Tensions Ebb and Fed Probe Ends

Gold prices advanced on optimism that the US and Iran are moving towards talks, with bullion rising above $4,700 an ounce as bond yields fell. The Federal Reserve's interest rate path remains uncertain after the Justice Department dropped its probe of Chair Jerome Powell.

Iran's Foreign Minister Abbas Araghchi is due in Islamabad on Friday, and a second round of peace talks between the US and Iran is expected, according to officials in Pakistan familiar with the matter. Araghchi will also visit Oman and Russia, according to Iranian media. President Donald Trump will send US special envoy Steve Witkoff and Jared Kushner to Pakistan for talks with Araghchi this weekend.

Higher energy prices since the war began in late February have stoked concerns about persistently high price pressures, which may prompt the Federal Reserve and its peers to keep interest rates elevated for longer or even raise them further. This is negative for non-yielding bullion. Bullion has traded in a tight range in recent weeks as traders navigate a steady stream of shifting headlines from the Middle East conflict.

Read also: Reliance Industries Nears Green Ammonia Supply Deals with International Partners

Despite this, bullion has fallen about 10% since the war began in late February as investors initially sold the precious metal to raise cash in the early stage of the war. The ending of a controversial investigation into building-renovation cost overruns by the Fed may have cleared a path to confirmation for Kevin Warsh, President Donald Trump's pick to be the next Fed leader. Warsh is known for his hawkish stance on inflation. Investors do not expect him to deliver the aggressive rate cuts urged by Trump, but rather pursue a measured approach with gradual moves to lower borrowing costs.

The State Oil Fund of Azerbaijan, one of the largest sovereign gold buyers, released data showing it had sold nearly 22 tons of gold in the first quarter, an amount worth more than $3 billion at current prices. Rapid price gains meant gold's share of the fund's portfolio was straining its target upper threshold of 35%, creating a need to rebalance the holdings.

Spot gold rose 0.7% to $4,729.07 an ounce as of 11:57 a.m. in New York. Silver was up 1% at $76.44 an ounce. Platinum fell, while palladium gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, dropped 0.2%.

Read also: Reliance Consumer Products Posts FY26 Revenue of Rs 22,000 Crore