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Gold prices surged over 4% to nearly $4,690 per ounce as geopolitical tensions in the Middle East eased, driven by statements from former U.S. President Donald Trump suggesting willingness to de-escalate conflict with Iran. Reduced fears of military escalation have lowered the risk premium embedded in gold, traditionally a safe-haven asset. Analysts note that de-escalation could lead to lower oil prices and ease pressure on central banks to tighten monetary policy, indirectly supporting gold's appeal.
For traders, the move highlights gold's dual role as both a hedge against geopolitical risks and a beneficiary of accommodative monetary policy. The decline in the risk premium may temporarily weaken gold's safe-haven demand, but sustained de-escalation could shift focus to other assets like equities. Market participants are now monitoring further diplomatic developments and central bank policy cues.
Looking ahead, investors should watch for renewed tensions in the Middle East or unexpected policy shifts from major central banks. Gold's performance will likely remain tied to the interplay between geopolitical stability and inflation expectations. Technical levels around $4,650 and $4,800 could serve as key resistance and support zones in the near term.
