Gold and Silver Up as Oil Prices Climb, Iran Peace Negotiations Uncertain

 

Gold and Silver Up as Oil Prices Climb and Iran Peace Negotiations Remained Uncertain

(Bullion News Network) – Gold and silver prices climbed on Friday as the price of crude oil rose and the prospects of a quick end to the US-Iran war stalled. The spot price of gold gained more than $115 per troy ounce, crossing $4,500/ozt and managing to squeak out a small win on the week. Silver prices followed suit, with the precious metal adding more than $1.80 per troy ounce to reclaim some price action above $70/ozt. The precious metal is down from a midweek peak of approximately $71.30/ozt but is up compared to last Friday’s closing price. The price action favored gold, driving the gold-silver ratio higher by around half a point. Today’s movement caps off a relatively volatile week in both markets as traders attempted to respond to an evolving situation in Iran. Oil prices jumped on Friday as statements from Iran, Israel, and the United States suggested that de-escalation may not be coming any time soon.

Wall Street sank on Friday, with the S&P 500 logging its fifth consecutive losing week. This is the longest streak of losing weeks in nearly four years. Rising oil prices and uncertainty in the Middle East are likely to blame. The price of crude oil rose on Friday by nearly 7%, crossing $100 per barrel after Iran blocked two Chinese ships from crossing the Strait of Hormuz. The Strait, through which 25% of the world’s crude oil flows annually, has been a major point of contention between the United States and Iran as the two countries attempt to resolve the armed conflict. Markets received a brief bump earlier this week after U.S. President Donald Trump announced a peace proposal submitted to Iran, but Tehran denied the proposal, which would have required the country to cease blocking the Strait of Hormuz.

Precious metals moved opposite to Wall Street, gaining on the uncertainty as traders attempted to make sense of an increasingly complex and potentially dangerous situation in Iran. Israel vowed on Friday to “intensify and expand” its attacks on Iran, even as Trump assured Americans that a peace deal was in the works. Further escalation in the war risks a more prolonged closure of the Strait of Hormuz, which would drive crude oil prices higher and cause a cascade of harmful economic impacts across the globe. The uncertainty played well for safe haven assets on Friday; gold and silver tend to perform well during times of uncertainty, and rising oil prices have traditionally correlated with heightened demand for gold.

American officials remain hopeful that the war in Iran will soon end. Steve Witkoff, United States envoy, told reporters that the U.S. hopes that Iran will come to the negotiating table this upcoming week. “Peace through strength,” he said, is President Trump’s philosophy with regard to the conflict. In terms of long-term strategic objectives, Witkoff said that the main priority of U.S. forces is to achieve a solution that involves no Iranian access to nuclear enrichment. He added that the administration will work to prevent a “North Korea in the Middle East.”

Precious metals have failed to meet investor expectations, considering the geopolitical situation facing traders since the war in Iran began. Gold prices tend to increase as the price of crude oil climbs, and safe haven assets generally often perform well during periods of heightened international conflict. In 2025, gold logged multiple all-time highs as tensions flared between Israel and neighboring Muslim nations. During this conflict, however, significant volatility has characterized both the gold and the silver markets. Some analysts speculate a “liquidity flush” may be behind the volatility, which drove gold to several recent lows in the immediate aftermath of the war in Iran. During a liquidity flush, investors attempt to quickly sell liquid, profitable holdings in order to cover their losses in other markets. In this case, a large retreat in the stock market after the US-Iran war began may have caused investors to sell gold holdings in order to cover losses on Wall Street.

Also motivating precious metal markets is the evolving rate cut situation. On Friday, CME FedWatch projected a 2.1% probability of a rate hike at the FOMC’s April meeting. This figure is down from 6.2% on Thursday and 12.4% one week ago. Although the Fed is largely expected to leave rates unchanged at its April meeting, a retraction in the likelihood of a rate hike bodes well for safe haven assets, which do not bear interest and consequently tend to perform well in climates characterized by falling interest rates. The rising probability that the Fed will raise interest rates in April, rather than lower them, is likely due to inflation expectations surrounding climbing oil prices and the ongoing war in Iran. Federal Reserve Chair Jerome Powell mentioned the potentially inflationary impact of the war in a press conference following the FOMC’s March interest rate decision.

Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by supply disruptions in the Middle East […] But the implications of events in the Middle East for the U.S. economy are uncertain. In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.

Next week, traders will be able to review the March U.S. employment work, which is scheduled for release on Friday. The February report was a major shock, showing a retraction of 92,000 jobs. The March employment report could have a major impact on rate cut/hike expectations, especially if the data shows another month of job losses. Aside from the jobs report, several Federal Reserve officials are slated to deliver speeches, including Fed Chair Jerome Powell.