Gold steadies as hopes of US-Iran truce ease rate-hike bets

Published Thu, May 21, 2026 · 09:22 AM

[SINGAPORE] Gold was little changed as optimism over efforts to end the Middle East conflict eased bets on interest-rate hikes.

Bullion was near US$4,540 an ounce in early trading, after gaining 1.4 per cent in the previous session. US President Donald Trump said the US is in the “final stages” with Iran. The US dollar and Treasury yields retreated on Wednesday (May 20), lifting gold as it’s priced in the US currency and pays no interest.

A potential end to the war and the reopening of the Strait of Hormuz would ease inflation concerns driven by elevated energy prices, reducing expectations that global central banks will keep interest rates higher for longer. That would be positive for non-yielding bullion, which typically performs well in a lower-rate environment.

However, investor optimism is moderated by the frequent swings in rhetoric from both sides in the conflict. Bullion is down about 14 per cent since the war began in late February, while yields on 10-year Treasuries remain near their highest levels in about a year.

The minutes of the US Federal Reserve’s latest policy meeting showed a majority of officials warned the US central bank would likely need to consider raising rates if inflation continued to run persistently above their target.

Gold has traded in a narrow range since falling sharply in the early days of the Middle East conflict, as investors weigh higher rates against the prospect of a high-inflation, low-growth scenario, which they argue should benefit gold.

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“When the Strait of Hormuz situation eventually deescalates, the prevailing macro headwinds against gold will ease and the gold price will likely bottom out,” Citigroup analysts, including Kenny Hu, said. In the event of a much longer closure of the waterway, concern will shift to stagflation, when precious metals tend to perform well historically, they said.

Spot gold was little changed at US$4,542.16 an ounce as at 7.45 am in Singapore. Silver was down 0.1 per cent at US$75.83. The Bloomberg Dollar Spot Index, a gauge of the US currency, was marginally higher after ending the previous session down 0.3 per cent. BLOOMBERG