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Gold prices surged to a two-week high on Thursday, driven by renewed optimism over potential de-escalation in US-Iran tensions. The precious metal rose 5% over three sessions, with a 3% rally on Wednesday marking its largest single-day gain since March 31. This surge coincided with declines in the US dollar and crude oil prices, as investors shifted toward risk-on assets amid improved geopolitical prospects. The US-Iran peace talks have alleviated fears of a military conflict, reducing demand for safe-haven assets like gold while weakening energy prices due to reduced supply concerns.
For traders, the move highlights the inverse relationship between gold and the dollar, as well as gold's role as a geopolitical hedge. The dollar's weakness against the euro and yen further supports gold's appeal. Crude oil's drop below $60/barrel also reflects reduced tension-driven volatility. However, traders should note that gold's gains may face resistance if peace talks stall or if central banks adjust monetary policy.
Looking ahead, the focus will be on upcoming US-Iran diplomatic updates and the Federal Reserve's stance on interest rates. For Gulf investors, the interplay between geopolitical risks and energy prices remains critical. Monitoring the dollar index and oil production reports will be key to assessing gold's trajectory in the coming weeks.
