Gold Holds Advance Near $4,315 Even as Oil Slides on Easing Middle East Tensions

Gold continued to rise after the U.S.-Iran agreement, even as crude prices tumbled on expectations that the Strait of Hormuz will reopen. Investors are still treating bullion as a safe-haven asset.

Bloomberg reported on June 15 that spot gold traded near $4,315 an ounce. Bullion has gained 2.2% since the U.S. and Iran announced a temporary agreement a day earlier to end the war and lift the maritime blockade.

President Donald Trump said the Strait of Hormuz could be fully reopened on June 19. Even so, U.S. allies remain cautious, saying it may take considerable time before energy and commodity shipments return to normal.

Oil prices, by contrast, fell sharply. West Texas Intermediate traded near $81 a barrel after dropping about 5% the previous day, while Brent crude hovered around $83.

Gold remains down about 18% since the U.S. and Israel attacked Iran in February. During the war, gold prices generally moved opposite to oil. Rising crude added to inflation pressure and reinforced tighter central-bank policy, reducing the relative appeal of non-yielding gold.

Nicky Shiels, head of research and metals strategy at MKS PAMP, said current prices still appear undervalued compared with moves in gold and silver during past Middle East conflicts. If the peace agreement holds, investors may again view gold as both a safe-haven asset and an alternative to the dollar.

Market participants are also watching major central-bank meetings this week. The Federal Reserve is due to hold its first Federal Open Market Committee meeting under new Chair Kevin Warsh, and markets are pricing in the possibility of another rate increase this year.