Gold rallies as Hormuz opening weakens oil inflation fears

Gold prices extended their gains on Friday, supported by a weaker US dollar and a fresh shift in market sentiment after Iran said shipping through the Strait of Hormuz would remain open during the ceasefire period.

The move helped drive oil prices lower, easing some of the inflation pressure that had built up during weeks of conflict and restoring optimism that central banks may have more room to cut interest rates. That combination proved supportive for bullion, which tends to benefit when the dollar softens and borrowing costs are expected to fall.

Spot gold rose 1.5% to US$4,861.32 an ounce by 1.58pm Eastern Time, taking its gain for the week to more than 2%. US gold futures also settled 1.5% higher at US$4,879.60.

The latest push higher came after Iran’s foreign minister said in a post on X that transit through the Strait of Hormuz would continue along pre-coordinated shipping routes previously announced by Iran’s Ports and Maritime Organisation. US President Donald Trump also said negotiations could take place over the weekend and that he believed an agreement to end the Iran war could come soon.

That change in tone gave markets reason to believe the immediate threat to energy supply may be easing. With oil prices coming under pressure, concern over another inflation spike also began to soften.

Peter Grant, vice-president and senior metals strategist at Zaner Metals, said the reopening of the strait was a major development. With oil falling, he said, inflation worries were likely to ease, while expectations for interest-rate cuts could recover, a backdrop that is clearly favourable for gold.

He added that bullion could make another short-term push above US$5,000 an ounce.

The decline in the US dollar added further support. A weaker greenback makes gold cheaper for buyers holding other currencies, often increasing demand for the metal.

Gold had previously come under pressure after the United States and Israel launched strikes on Iran in late February. The resulting surge in oil prices stoked inflation fears and led markets to scale back expectations for lower interest rates. Because gold does not pay interest, it tends to lose some appeal when rates are expected to stay higher for longer.

Elsewhere in the precious metals market, silver posted an even stronger move. Spot silver jumped 4.2% to US$81.71 an ounce and was up more than 7% for the week.

Platinum gained 1.6% to US$2,118.30, while palladium also rose 1.6% to US$1,576.15. Both were on track to end the week higher.

In India, meanwhile, banks have suspended orders for imported gold and silver from overseas suppliers, with large volumes of precious metals reportedly stranded at customs checkpoints because there has been no formal government order authorising imports, according to trade sources.

That disruption has added another layer of uncertainty to the global bullion trade at a time when investors are already navigating war-driven volatility, shifting interest-rate expectations and unstable commodity markets.