Gold recorded a strong increase following the announcement of a preliminary agreement between the United States and Iran to end hostilities and reopen the Strait of Hormuz. The move is expected to reduce inflationary pressures globally and affect expectations for future interest rate increases.

The price of the precious metal rose by up to 2.7%, surpassing $4,330 per ounce, after a social media post by US President Donald Trump stating that “the agreement with the Islamic Republic of Iran has now been completed.” The existence of the agreement was also confirmed by Iran’s deputy foreign minister, who noted that signing is expected on Friday in Switzerland. It is worth noting that gold had fallen by 2.5% the previous week.

Since the start of the war at the end of February, gold and oil have largely moved in opposite directions, as higher energy prices fueled inflation concerns and kept expectations for higher interest rates elevated, limiting the appeal of the precious metal.

Despite today’s rise, gold remains about 18% lower compared to the levels recorded at the beginning of the conflict.

Investors are now closely watching central bank decisions this week, with attention focused on the Federal Reserve meeting under its new chair Kevin Warsh. The market continues to price in a possible further interest rate hike later this year.