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Gold prices rose over 1.30% on Monday as speculation about a potential deal to ease tensions in the Strait of Hormuz pressured the US Dollar. The XAU/USD pair climbed to $4,570 after rebounding from $4,519, driven by weak USD sentiment amid US equity futures hitting record highs. Thin trading due to the US Memorial Day holiday added volatility to the market. The Hormuz deal rumors, which could stabilize oil supply routes, have shifted investor focus toward safe-haven assets like gold.
The weakening USD and strong equity market performance highlight divergent investor priorities. Traders are balancing between geopolitical risks (Hormuz deal) and economic optimism (US equity strength). Gold’s rally reflects its role as a hedge against currency depreciation and geopolitical uncertainty. The US Dollar’s decline also stems from expectations of lower Federal Reserve rate hikes, which could further support gold prices.
For markets, the key focus will be on developments regarding the Hormuz deal and their impact on oil prices and USD demand. Investors should monitor central bank policies and global risk appetite shifts. If the Hormuz deal materializes, it could reduce energy price volatility and weaken gold’s appeal as a safe-haven asset. Conversely, prolonged tensions might sustain gold’s upward momentum.
