Gold Up, Silver Flat As Trump Considers Iran Peace Proposal

 

Gold Up, Silver Flat As Trump Considers Iran Peace Proposal

(Bullion News Network) – Gold saw a bit of movement to end the trading week on Friday, with the metal’s spot price gaining nearly $50 per troy ounce. Silver prices were more flat, shedding approximately $0.25/ozt toward the end of the trading day but lagging near zero change for most of Friday morning. The price action favored gold, driving the gold-silver ratio higher.

The lackadaisical end to the trading week came as the Trump administration was set to weigh the latest peace deal proposal from Iran. Iran and the United States traded airstrikes and verbal threats throughout the week, but the ceasefire held steady. Friday afternoon, U.S. President Donald Trump told reporters that he would make the “final determination” on extending the US-Iran ceasefire during a White House Situation Room meeting.

Thursday, AP reported that negotiators had reached an agreement that would extend the US-Iran ceasefire by 60 days as the two countries continued negotiations about the Iranian nuclear program. The deal was pending the approval of Trump, who confirmed its existence on Friday ahead of the Situation Room meeting.

Iran’s nuclear program and the reopening of the Strait of Hormuz remain key sticking points in any potential peace deal, Trump said in a Truth Social post on Friday.

Iran must agree that they will never have a Nuclear Weapon or Bomb. The Hormuz Strait must be immediately open, no tolls, for unrestricted shipping traffic, in both directions […] The enriched material, sometimes referred to as “Nuclear Dust,” which is buried deep underground with virtually collapsed mountains, caused by our powerful B2 Bomber attack 11 months ago, sitting on top of it, will be unearthed by the United States (which, it is agreed, is the only Country, along with China, with the mechanical capability of doing so!), in close coordination and conjunction with the Islamic Republic of Iran, plus the International Atomic Energy Agency, and DESTROYED […] I will be meeting now, in the Situation Room, to make a final determination.

For global markets, the biggest takeaway from a peace deal will be the reopening of the Strait of Hormuz. The vital waterway transports an estimated 25% of the world’s daily seaborne oil, but the Iranian-controlled strait has been closed since early March. This closure drove oil prices to highs throughout March, April, and May. The price of crude oil was highly volatile on Friday as traders speculated on the prospects of a longer-term peace deal that may reopen the strait.

Precious metals have reacted in any way but reasonably to the ongoing conflict in Iran. Although gold has historically tended to thrive in times of conflict and gain traction as crude prices spike, this year has seen the precious metals market move in lockstep with Wall Street more often than not. It’s hard to pinpoint a cause, but it is worth noting that periods of heightened uncertainty may trigger a “risk-off” moment, where traders can feel motivated to maximize their liquidity and pull money from many different investment classes likely to be quickly impacted by major news breaks.

In the U.S., the April inflation numbers released on Thursday did little to calm concerns about rising consumer prices. The April PCE saw the year-over-year PCE increase by 3.8%, its highest rate since 2023. Although the report’s readings came in either at or below median forecasts, this price jump was enough to place a rate hike back on the table for the Federal Reserve’s next meeting.

The FOMC will meet in June, the first Fed meeting headed by Kevin Warsh, Trump’s nominee for Fed chair who was confirmed earlier this month. Warsh is expected to face heavy pressure to cut rates from the White House; President Trump repeatedly urged former Fed chair Jerome Powell to ease monetary policy throughout 2025 and early 2026. However, Warsh has inherited a complex economic situation – and a historically divided committee.

CME FedWatch adjusted its projections for June’s meeting on Friday, erasing the probability of a rate cut and suggesting a 1.7% likelihood that the central bank’s board votes to raise interest rates. Cutting interest rates is typically an inflationary action, so rising consumer prices may force the Fed to counteract inflation by raising rates instead. This calculus could get complicated, though, if the employment market lags this quarter. Powell hinted at this tension during several post-decision press conferences last year, referring to it as “tension” between the Fed’s two objectives of lowering costs and maximizing employment.

Next Friday will be a real test as traders get a look at the May U.S. employment report.