A historic peace agreement between the United States and Iran, coupled with the reopening of the Strait of Hormuz, sent international oil prices tumbling more than 5%. Easing inflation concerns reduced expectations for further Federal Reserve rate hikes, while the US dollar weakened. Spot gold surged 2.2% during Monday’s early trading session, reaching its highest level in nearly a week. Investors are also closely watching this week’s Federal Reserve decision and a series of key US economic data releases.

In the early hours of June 15, both Pakistani Prime Minister Shehbaz Sharif and US President Donald Trump announced that the United States and Iran had reached an agreement. Trump stated that he had approved free passage through the Strait of Hormuz and authorized the immediate lifting of the US Navy’s blockade of Iran.

Iran quickly followed with official confirmation. Iran’s Deputy Foreign Minister stated that the agreement, formally titled the “Islamabad Memorandum of Understanding,” had been finalized and that the official signing ceremony is scheduled to take place in Switzerland this Friday, June 19.

As one of the world’s most important energy shipping routes, the Strait of Hormuz had faced severe disruptions due to the US-Iran standoff and maritime blockades. Trump explicitly stated that the Strait would reopen for oil transportation following the signing of the agreement on Friday.

This suggests that the geopolitical risk premium embedded in global oil supplies is rapidly fading, while millions of barrels of Iranian crude oil could soon return to international markets. The sharp reduction in supply-side concerns directly triggered a significant decline in oil prices.

The collapse in oil prices subsequently led markets to reprice inflation expectations.

If inflation is no longer expected to remain as persistent as previously feared, the need for further Federal Reserve rate hikes naturally diminishes as well.

Beyond geopolitical developments, US inflation data and Federal Reserve policy expectations remain the primary headwinds limiting gold’s upside potential.

Last week’s stronger-than-expected US inflation figures significantly reinforced market expectations that the Federal Reserve could maintain higher interest rates for longer, creating sustained pressure on non-yielding assets such as gold.

Now, the US-Iran peace agreement is helping to remove one of gold’s heaviest burdens through a complete transmission mechanism: lower oil prices reduce inflationary pressure, which weakens expectations for future rate hikes.

Market attention has now shifted toward the Federal Reserve’s policy meeting scheduled for June 16–17, which will be the first meeting chaired by new Fed Chair Kevin Warsh.

While markets broadly expect policymakers to leave interest rates unchanged, Warsh’s comments and tone during the post-meeting press conference could provide critical clues regarding the future direction of monetary policy.

Market Analysis

Gold rallied sharply on the 4-hour chart, with both the MACD lines and histogram expanding above the zero line.

Although the US-Iran peace agreement has provided the gold market with a much-needed boost, investors should remain aware that the coming week will present a significant test for global financial markets.

A series of major central bank policy decisions are scheduled to be announced, and any unexpected hawkish signals could place renewed pressure on gold prices.

Nevertheless, the current combination of easing geopolitical risks, softer rate-hike expectations, and continued uncertainty surrounding the global economic outlook suggests that gold’s longer-term upside potential remains intact.