Gold Prices Hit 7-Week High: Why Are They Rising?

Gold prices have reached a seven-week high due to diplomatic efforts in the Middle East and a decline in the US Dollar Index. Spot gold rose to $4,265 per ounce, the highest level since June 18. Gold prices have been on an upward trend for four days. The easing of the US Dollar Index and American Treasury yields, combined with diplomatic efforts to reduce tension in the Middle East, have strengthened the upward momentum in the market. According to reports, analysts believe that the likelihood of a regional agreement is at the center of the upward trend in price. Reports from Tehran and regional sources indicate that Oman and Iran are working on a draft to end the five-month-long US-Iran tension. The draft reportedly includes giving Tehran the right to monitor maritime traffic passing through the Strait of Hormuz to the Persian Gulf. Since the outbreak of conflict on February 28, spot gold had fallen 19% due to concerns that soaring energy costs would drive up interest rates and inflation. However, the possibility of normalized traffic in the Strait is easing upward pressure on oil prices, weakening the likelihood of central banks raising interest rates.