Gold rises and oil falls after Trump canceled strikes against Iran economy

Gold prices rose today, Thursday, while oil prices fell, after US President Donald Trump announced the cancellation of planned military strikes against Iran, which raised hopes for calming geopolitical tensions in the Middle East and eased fears of disruption to global energy supplies.

Gold rose in instant transactions by 2.2% to $4,160.89 per ounce at the time of preparing the report, after it had previously recorded its lowest level since late last November. On the other hand, US gold futures for August delivery rose 1.48% to $4,195.80 per ounce.

Trump said that he decided to cancel the military strikes that were scheduled against Iran after the discussions reached an “advanced level,” noting that a number of countries agreed to discuss the final points of a possible agreement.

Gold’s rise came as expectations of a US interest rate hike next December declined, as the odds of a hike fell to 62% compared to 69% before Trump’s announcement.

US data also showed that weekly unemployment claims rose to 229,000, exceeding expectations of 219,000, while inflationary pressures continued with a rise in producer prices during May.

Investors are awaiting the Federal Reserve meeting next week amid widespread expectations to keep interest rates unchanged.

As for other precious metals, their performance was as follows:

• The price of silver in spot transactions rose 4.67% to $66.36 per ounce.
• Platinum gained 2.97%, reaching $1,715.96.
• Palladium increased 4.58% to $1,274.10.

Dollar falling

In the currency market, the dollar fell after canceling the planned military strikes against Iran, so the greenback index, which measures the performance of the US currency against a basket of six major currencies, fell by 0.33% to 99.71 points after touching the level of 100.31 points, which is its highest level in more than two months.

The dollar had received support earlier in the session after Trump’s threats to launch strong strikes against Iran and control Kharg Island and other oil facilities, which strengthened demand for the American currency as a safe haven.

The dollar fell by 0.35% against the Swiss franc to 0.797 francs (one dollar), giving up its early gains, while the euro rose by 0.21% to 1.1559 dollars.

Despite the subsequent decline, the dollar’s losses remained limited as expectations grew that the Federal Reserve may have to tighten monetary policy or raise interest rates if high energy prices continue to fuel inflation.

US data showed that the producer price index rose by 6.5% on an annual basis during May, compared to 5.7% in April, a day after the release of data showing that consumer inflation accelerated to 4.2%, the highest level since April 2023.

On the other hand, basic indicators of inflation indicated that the impact of rising energy prices on the rest of the sectors of the economy is still relatively limited, as core inflation for producers stabilized at 4.9%, while core inflation for consumers rose slightly to 2.9%.

Oil is falling

In energy markets, oil prices fell after Trump announced the suspension of strikes, as Brent crude fell by 3.36% to $89.97 per barrel, while US West Texas Intermediate crude fell by 3.13% to $87.21 per barrel.

Trump had previously threatened to launch additional strikes on Iran and target Kharg Island, the largest Iranian oil export port, before later announcing the cancellation of the military operation.

Despite the decline in prices, analysts believe that the markets are still facing a state of uncertainty in light of the continuing tension between Washington and Tehran.

Rystad Energy indicated that the global oil market has become more capable of absorbing turmoil compared to previous crises, benefiting from the rise in US oil exports, the decline in Chinese demand, and the existence of alternative export routes that reduce dependence on the Strait of Hormuz.

But the company warned that the chances of reaching a quick diplomatic breakthrough are still limited, which leaves oil prices vulnerable to sharp fluctuations depending on the developments of the crisis during the coming period.