04/06/2026
Gold prices advanced as dip buyers returned to the market following a conditional ceasefire agreement between Israel and Lebanon. The truce marks a potential step toward de-escalating broader Middle East tensions, which have disrupted global energy markets and stoked inflation risks.
Buoyed by the positive development, gold surged as much as 1% to breach $4,475 per ounce, largely erasing losses from the previous trading session. A joint statement issued by Israel, Lebanon and the United States stipulated that the truce is conditional on the full cessation of hostilities by Iran-backed Hezbollah.
The deal represents Washington’s latest effort to advance peace talks with Iran and stabilize the Middle East. Severe clashes erupted earlier on Wednesday, marking the most intense flare-up since a prior ceasefire took effect in April. The unrest spilled over to neighbouring Kuwait and Bahrain, with aerial threats severely disrupting the U.S.-Iran negotiation process.
While the U.S. and Iran have reached a preliminary framework to extend the ceasefire and reopen the Strait of Hormuz, a final agreement remains distant. U.S. President Donald Trump stated that the critical energy shipping lane would be reopened “immediately” once Iran signs a relevant memorandum of understanding. However, Tehran has reservations over Washington’s peace terms, leaving substantial bilateral differences unresolved.
Prolonged disruptions to energy shipments through the Strait of Hormuz have pushed up global oil prices and intensified inflationary pressures. Heightened inflation expectations are likely to prompt major central banks to hold interest rates steady or even tighten monetary policy. Higher interest rates typically weigh on gold, a non-yielding precious metal, constituting a key headwind for gold prices recently.
Gold and oil prices have generally moved inversely since the Middle East conflict broke out in late February. Gold tumbled sharply in the early stages of the conflict and remains around 15% below its pre-war level, though it has traded in a tight range in recent weeks. Oil prices retreated after three consecutive days of gains following the announcement of the Israel-Lebanon truce.
Market analyses warn that inflationary pressures will persist without a comprehensive and long-term resolution to the regional conflict. Lorie Logan, President of the Federal Reserve Bank of Dallas, indicated that policymakers may need to raise interest rates later this year to bring inflation back to the U.S. central bank’s 2% target.
As of 11:45 a.m. Singapore time, spot gold rose 0.6% to $4,460.20 per ounce. Spot silver climbed 0.8% to $73.34 per ounce, while platinum and palladium also posted gains. The FXCG USD Spot Index was largely flat on the day, after rising 0.3% in the previous session.
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