Gold prices moved higher on Thursday, supported by a decline in oil prices and a softer U.S. dollar following renewed ceasefire efforts between Israel and Lebanon, while investors awaited key U.S. employment data for further clues on interest rate policy.
By 06:23 ET (10:23 GMT), spot gold had advanced 0.7% to $4,465.24 per ounce, while gold futures rose 0.6% to $4,493.12 per ounce.
The precious metal found support after Israel and Lebanon agreed to reinstate a fragile ceasefire, raising hopes that broader diplomatic progress could eventually lead to an agreement between the United States and Iran.
Any breakthrough between Washington and Tehran has been closely tied to stability in Lebanon, where Israeli forces backed by the United States have been engaged in conflict with Hezbollah, the Iran-supported militant group.
Following a fourth round of negotiations mediated by the United States, Israel and Lebanon stated that the ceasefire would be “contingent on a complete cessation of Hezbollah fire and the evacuation of all Hezbollah operatives” from areas south of the Litani River.
“These steps will enable progress towards a comprehensive peace and security agreement,” the two sides said in a joint statement.
Hezbollah was not involved in the negotiations.
Diplomatic developments continued to attract attention after U.S. President Donald Trump indicated on Wednesday that talks with Iran could make meaningful progress as soon as this weekend. Iran’s foreign minister also said communication channels with Washington remain open, despite earlier reports suggesting indirect contacts had been suspended.
Meanwhile, the Wall Street Journal reported that Trump has informed advisers he does not intend to resume military action against Iran unless American personnel are killed.
At the same time, domestic pressure to end the conflict appears to be increasing. The U.S. House of Representatives approved a resolution aimed at preventing further military engagement, although the measure still faces Senate approval and would require sufficient support to overcome a presidential veto.
Lower Oil Prices Support Precious Metals
Energy markets reacted positively to the ceasefire developments.
Brent crude futures fell 1.5% to $96.30 per barrel, while U.S. West Texas Intermediate crude declined 1.2% to $94.84 per barrel.
Although prices have eased from recent highs, crude remains well above levels seen before the conflict began. Supply disruptions linked to restrictions in the Strait of Hormuz continue to affect global energy markets, maintaining concerns over longer-term inflation risks.
Investors have been increasingly worried that elevated energy costs could fuel a new wave of inflation, potentially prompting central banks to maintain tighter monetary policy for longer. Such an environment is often viewed as less supportive for non-yielding assets such as gold.
However, government bond yields eased on Thursday, offering additional support to bullion prices. Both the U.S. two-year Treasury yield and the benchmark ten-year yield moved lower during the session.
“We expect most central banks across developed markets—including the Federal Reserve, Bank of England, and others—to keep rates unchanged in the near term,” analysts at UBS said in a note.
Focus Turns to U.S. Employment Data
Market participants are now turning their attention to Friday’s U.S. employment report, which could provide further insight into the health of the labour market and the broader economic impact of the ongoing conflict in the Middle East.
The data will be closely watched by Federal Reserve officials, who continue to balance the need to control inflation while supporting employment growth.
Any signs of weakness in the labour market could influence expectations for future monetary policy decisions and, in turn, affect demand for safe-haven assets such as gold.