Gold climbed 1% on Wednesday to settle at $4,461.09 per ounce, driven by a cocktail of forces that tend to make the yellow metal shine: a weaker dollar, cheaper oil, and just enough geopolitical uncertainty to keep investors reaching for safety.
The US dollar index slipped roughly 0.09% on the day. For gold, which is priced in dollars, even small dips in the greenback make bullion cheaper for holders of other currencies.
What’s driving the move
Three threads came together on June 4. The dollar weakness was the most immediate catalyst, but falling oil prices added fuel. Crude dropped as much as 0.79%, largely on growing optimism that a diplomatic breakthrough between the US and Iran could be in the cards.
If negotiations produce a deal that eases tensions in the Middle East, energy markets could see meaningful relief. Lower oil prices feed into lower inflation expectations, which in turn give central banks less reason to keep monetary policy tight. At the same time, the mere fact that a deal isn’t done yet and the Middle East remains unstable keeps safe-haven demand alive.
