Gold jumps 2% above $4,300 as US-Iran peace deal eases inflation fears

Gold prices jumped 2% to above $4,300 an ounce on Monday, extending gains for a third consecutive session after the US and Iran reached a peace agreement that is expected to reopen the Strait of Hormuz and ease pressure on global energy markets.

The precious metal advanced as oil prices declined to a two-month low following the announcement, reducing concerns that higher energy costs could keep inflation elevated and force major central banks to maintain a tighter monetary policy stance.

US President Donald Trump announced Sunday that an agreement with Iran had been finalized and said he was authorizing the reopening of the Strait of Hormuz and the removal of a US naval blockade.

"The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!," Trump said in a post on his Truth Social platform.

The reopening of the Strait of Hormuz, one of the world's most important energy transit routes, is expected to ease supply concerns that had intensified during the conflict and triggered sharp moves across commodity markets.

Lower oil prices supported risk sentiment and eased inflation expectations, while gold also benefited from continued demand for safe-haven assets amid uncertainty over the implementation of the agreement.

Investors are also focused on this week's US Federal Reserve policy meeting, the first under new Chair Kevin Warsh. The Fed is widely expected to leave interest rates unchanged.

Gold, which does not yield interest, is sensitive to expectations over borrowing costs. Lower or steady interest rates generally support bullion by reducing the opportunity cost of holding the metal.

Other major central banks are also in focus. The Reserve Bank of Australia is expected to keep policy steady, while the Bank of Japan is likely to raise interest rates in an effort to support the yen.

Market participants will closely monitor central bank guidance, energy price moves, and developments related to the US-Iran agreement for the next direction in precious metals.