Gold jumps above $3,975 as dollar retreats, Iran diplomacy in focus

Gold prices surged on Wednesday, extending their recovery above $3,975 an ounce as a weaker U.S. dollar supported bullion, while investors continued to monitor diplomatic efforts to resolve the U.S.-Iran conflict and assess the implications of U.S. midterm election results.

At 01:11 ET (06:11 GMT), spot gold rose 1.2% to $3,978.71 an ounce, while U.S. gold futures also advanced 1.2% to $3,988.95.

Silver advanced 1.6% to $50.5675 an ounce, while platinum climbed 1% to $1,432.93. Spot palladium rose 1.7% to $952.50, while palladium futures gained 2% to $948.75. The U.S. dollar Index fell 0.4% to 101.50.

Bullion eased modestly after gaining nearly 2% in the previous session, leaving prices volatile this week as conflicting signals on U.S.-Iran negotiations complicated the inflation outlook.

Oil prices fluctuated within a range of around $5 a barrel on Tuesday as Washington and Tehran reviewed new proposals from mediators aimed at resolving their differences and preventing a return to full-scale conflict, according to reports.

The diplomatic developments followed limited U.S. airstrikes on targets on Iran’s Qeshm Island within the Strait of Hormuz the previous night. Oil had surged over the past month as regional tensions intensified but reversed sharply this week after signs that the White House was prepared to give negotiations more time.

Crude and gold have generally moved in opposite directions recently, as elevated energy prices fuel inflation and increase expectations of higher interest rates, weighing on non-yielding bullion.

Gold fell almost 7% in October, breaking below the $4,000-an-ounce threshold at the end of the month after investors retreated from artificial intelligence-related investments and sold bullion to cover losses elsewhere.

The metal has also declined around 25% since the U.S.-Iran conflict erupted in late February, as accelerating inflation prompted tighter monetary policy.

Investors are now watching Tuesday’s U.S. midterm elections, which will determine control of both the House of Representatives and Senate.

The outcome could reshape expectations for U.S. fiscal policy and indirectly influence gold demand as traders assess the implications for government deficits, inflation and monetary policy.