Gold Prices Rise on Iran Peace Deal and Fed Rate Cut Expectations

Gold prices climbed 0.11% to close at 153,091 as expectations for U.S. Federal Reserve interest rate increases later this year declined, according to analysis from Kedia Advisory. An interim peace agreement between the United States and Iran significantly reduced geopolitical tensions and eased concerns about energy-related inflation. The accord extended the existing ceasefire and facilitated the reopening of the Strait of Hormuz, alleviating global energy market supply concerns and supporting improved market sentiment.

Weakening oil prices have reduced inflationary pressure, prompting traders to reconsider the likelihood of sustained tight monetary policy from the Federal Reserve. Economic data from the United States further supported gold prices. Housing starts in May experienced a sharp 15.4% decline, falling to 1.177 million units on an annual basis—the lowest level since May 2020 and significantly below market expectations. This weak housing data reinforced expectations that the Federal Reserve may adopt a more cautious stance. Market participants have reduced the probability of a December interest rate increase from approximately 70% to 58%, with focus now on upcoming policy decisions from the Federal Reserve under Chairman Kevin Warsh.

Physical gold demand showed mixed trends across major consuming nations. In India, lower prices stimulated purchasing and supported jewelry demand, though overall retail confidence remained subdued. Chinese premiums declined, reflecting balanced demand conditions. Global gold ETFs experienced a net outflow of $2 billion in May, primarily from Asia and North America, though year-to-date investment flows remained strongly positive. Central bank demand is expected to provide sustained long-term support, with 45% of reserve managers surveyed by the World Gold Council anticipating increased gold holdings in the coming year.

From a technical perspective, the market showed short covering activity, with open interest declining 0.84% as prices rose. Gold maintained support around 152,445, with additional support at 151,800. Upside resistance was identified at 153,650, and sustained price levels above this resistance could open the path to test 154,210.