Falling oil prices, driven by renewed US-Iran diplomacy, boost gold as investors seek safe-haven assets amid easing supply concerns.
Gold prices rose as oil extended declines for a second consecutive week, driven by optimism over US-Iran talks to reopen the Strait of Hormuz. President Donald Trump announced renewed negotiations with Tehran, citing pressure from regional allies like Saudi Arabia to avoid military escalation. A preliminary agreement on a temporary shipping route further eased supply fears, weighing on crude markets.
Oil prices had rallied earlier on geopolitical tensions but reversed course after the diplomatic breakthrough. Analysts noted that reduced supply risks in the Middle East historically support gold as a hedge against volatility. The shift underscores gold’s inverse relationship with oil during periods of geopolitical de-escalation.
Markets reacted with a modest uptick in gold futures, while oil benchmarks pared earlier gains. The focus remains on the durability of the US-Iran dialogue and its impact on energy flows.