Gold traded above $4,326 per ounce on Wednesday, extending gains that have lifted the precious metal more than 3.07% over the past seven days. Investors are closely monitoring the upcoming US-Iran peace agreement and the Federal Reserve's policy decision, while strong central bank demand continues to provide long-term support for the yellow metal.
The latest move highlights gold's resilience despite easing concerns about energy-driven inflation. Analysts say a combination of geopolitical uncertainty, government spending concerns, and persistent official-sector buying continues to underpin the market.
Markets are awaiting the signing of an interim agreement between the United States and Iran in Switzerland on Friday. The deal is expected to restore Iranian oil exports and improve crude supply flows through the Persian Gulf.
According to reports, the agreement outlines significant economic incentives for Tehran, including access to a $300 billion development fund if it fulfills its commitments. The return of Iranian oil to global markets could help stabilize energy prices and reduce inflation concerns, factors that often influence expectations for interest rates.
Investors are also following developments at the G7 summit in France, where President Donald Trump is meeting with world leaders. Discussions surrounding the US-Iran agreement have reportedly been candid, with negotiators continuing to refine the details of the framework.
Despite progress toward a US-Iran agreement, tensions in the Middle East remain a major market focus.
Iran's military warned of a "harsh response" if Israel continues its offensive against Hezbollah in Lebanon. Speaking at the G7 summit, Trump criticized Israeli Prime Minister Benjamin Netanyahu, saying Israel had been fighting Iran-backed Hezbollah for too long and that too many lives had been lost.
The combination of diplomatic progress and ongoing regional tensions has helped maintain demand for traditional safe-haven assets such as gold.
Attention is also turning to the Federal Reserve's upcoming policy announcement.
The central bank is widely expected to leave interest rates unchanged. This meeting marks the first chaired by Kevin Warsh, although he is not expected to submit a "dot" to the Federal Open Market Committee's quarterly interest rate projections.
Global monetary policy developments remain mixed. Earlier this week, the Reserve Bank of Australia held rates steady at 4.35%, while the Bank of Japan raised its policy rate by 25 basis points to 1%.
Any signals that interest rates may stabilize or move lower in the future could provide additional support for gold prices.
One of the strongest bullish drivers for gold remains central bank demand.
According to a recent survey by the World Gold Council, 45% of central banks plan to increase their gold holdings over the next 12 months, the highest percentage ever recorded. The figure has more than doubled since 2020 and marks the third consecutive annual increase.
Emerging market and developing economy central banks are leading the trend, with roughly 53% planning to add to reserves. Overall, 89% of central banks expect global gold reserves to rise over the coming year, the second-highest reading on record.
Source: World Gold Council
This steady accumulation reflects growing interest in diversifying reserve assets amid geopolitical uncertainty and changing global financial conditions.
Market strategists also point to extreme investment fund outflows as a potential contrarian bullish signal. Historically, periods of heavy selling have often preceded strong rebounds when underlying fundamentals remain intact.
With geopolitical risks still elevated, fiscal deficits continuing to expand, and central banks actively increasing gold reserves, many analysts believe the broader macroeconomic backdrop remains favorable.
As gold holds above the key $4,326 level, investors will be watching the Federal Reserve meeting and the outcome of the US-Iran agreement for clues about the metal's next move. While short-term volatility is likely, the longer-term trend continues to point toward sustained strength in the gold market.
