Gold prices fell by more than 1% in European trading on Wednesday and are on track for a second loss in three sessions, pressured by renewed military tensions between the United States and Iran, which pushed both the US dollar and oil prices higher across global markets.

Investors are awaiting additional key US labor market data in order to reassess expectations for the future path of Federal Reserve interest rates.

The Price

• Gold prices today: Gold fell 1.1% to $4,440.35 per ounce, from an opening level of $4,489.02, after reaching an intraday high of $4,496.76.

• At Tuesday’s settlement, gold posted a modest gain of 0.1%, after losing 1.2% in the previous session amid corrective selling and profit-taking from a two-week high of $4,595.33 per ounce.

US dollar

The US Dollar Index rose nearly 0.2% on Wednesday, extending gains for a third consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

As is well known, a stronger dollar makes dollar-denominated gold less attractive to holders of other currencies.

The dollar’s advance comes amid heightened caution in financial markets, with investors reducing risk exposure following renewed military strikes between the United States and Iran and awaiting the outcome of ongoing peace negotiations aimed at ending the conflict and reopening the Strait of Hormuz.

Global oil prices

Oil prices rose by more than 3% on Wednesday, extending gains for a third consecutive session amid renewed Middle East tensions and concerns that the Strait of Hormuz could remain closed.

Developments in the Iran conflict

• The US military announced that Iranian missile attacks targeting Bahrain, Kuwait, and other regional targets had either failed or been intercepted.

• US President Donald Trump said he believes a framework agreement with Iran to extend the ceasefire could be reached within the coming week.

• Iran confirmed that it is still reviewing the final draft proposal and has not yet submitted its official response to the United States.

• US Secretary of State Marco Rubio stated that Iran has agreed to discuss aspects of its nuclear program that it had previously refused to negotiate.

• The United States continues to insist that sanctions relief will not be granted solely in exchange for reopening the Strait of Hormuz and must be tied to broader issues such as Iran’s nuclear program.

US interest rates

• Cleveland Federal Reserve President Beth Hammack said on Tuesday that the US central bank may need to raise interest rates soon if already elevated inflationary pressures continue to intensify.

• According to the CME FedWatch Tool, market pricing for a Federal Reserve rate hike at the December meeting increased from 35% to 58%.

• Markets continue to price a 98% probability that interest rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at 2%.

• To reassess these expectations, investors will closely monitor upcoming US economic data and comments from Federal Reserve officials.

• ADP private-sector employment data for May will be released later today, weekly jobless claims are due on Thursday, and the official May employment report will be released on Friday.

Outlook for gold

Kelvin Wong, Senior Market Analyst for Asia-Pacific at OANDA, said: “The market is now looking at the possibility that the ceasefire with Iran may not hold, despite Trump’s efforts to secure a peace agreement.”

Wong added: “If we see further escalation, it could undermine any potential recovery in gold prices.”

SPDR Gold Trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by 0.86 metric tons on Tuesday, marking a fourth consecutive daily decline. Total holdings fell to 1,028.00 metric tons, the lowest level since October 15, 2025.

The euro weakened in European trading on Wednesday against a basket of global currencies, resuming its losses against the US dollar and moving further away from two-week highs. The single currency remains under pressure due to risk aversion as investors assess developments in negotiations between Washington and Tehran, following confirmation from both sides that diplomatic contacts continue and discussions over the final terms of a potential agreement are ongoing.

Inflation accelerated across the Eurozone last month, driven by rising energy and services prices, reinforcing expectations that the European Central Bank will raise interest rates later this month.

The Price

• Euro exchange rate today: The euro declined 0.1% against the dollar to $1.1620, from an opening level of $1.1632, after reaching an intraday high of $1.1633.

• The euro ended Tuesday little changed against the dollar after losing 0.2% in the previous session as part of a corrective pullback and profit-taking activity from a two-week high of $1.1686.

US dollar

The US Dollar Index rose about 0.1% on Wednesday, extending gains for a third consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

The advance comes amid persistent caution in financial markets, with investors reducing risk exposure while awaiting further developments in talks between the United States and Iran aimed at ending the conflict and reopening the Strait of Hormuz.

US-Iran talks

• US President Donald Trump stated that he believes a framework agreement with Iran to extend the ceasefire could be reached within the coming week.

• Iran confirmed that it is still reviewing the final draft proposal and has not yet submitted its official response to the United States.

• US Secretary of State Marco Rubio announced that Iran has agreed to discuss aspects of its nuclear program that it had previously refused to negotiate.

• The United States continues to insist that sanctions relief will not be granted solely in exchange for reopening the Strait of Hormuz, and that any agreement must also address key issues such as Iran’s nuclear program.

European interest rates

• Data released on Tuesday showed that inflation accelerated across the Eurozone last month, driven by higher energy and services costs linked to the fallout from the conflict involving Iran.

• Following the data, money markets increased the probability of a 25-basis-point ECB rate hike in June from 90% to 95%.

• Sources told Reuters that the European Central Bank is highly likely to raise interest rates in June, given inflation expectations that are moving toward an increasingly undesirable scenario.

The Japanese yen weakened in Asian trading on Wednesday against a basket of major and minor currencies, extending its losses for a third consecutive session against the US dollar and reaching the 160-yen threshold, placing investors on high alert for a possible intervention by Japanese monetary authorities to support the local currency and curb excessive movements in the foreign exchange market.

The US dollar maintained its gains against a basket of global currencies as markets assessed developments in negotiations between Washington and Tehran, following confirmation from both sides that diplomatic contacts remain ongoing and discussions over the final terms of a potential agreement are continuing.

The Price

• Japanese yen exchange rate today: The dollar rose by nearly 0.1% against the yen to ¥160.00, the highest level since April 30, from an opening level of ¥159.91. The session low was recorded at ¥159.82.

• The yen ended Tuesday down about 0.2% against the dollar, marking its second consecutive daily loss, amid rising tensions between the United States and Iran over the Strait of Hormuz.

The 160-yen threshold

Japanese authorities are closely monitoring movements in the currency market, particularly as the yen has fallen to the key ¥160-per-dollar level, which has long been viewed as a threshold that could trigger another intervention in the market.

According to Reuters sources, Tokyo intervened several times in late April and early May to halt the yen’s decline, but the currency’s recovery proved short-lived. At the time, the exchange rate reached ¥159.25 per dollar, its weakest level since April 30.

Japanese finance minister

Finance Minister Satsuki Katayama stated on Tuesday that authorities stand ready to intervene in currency markets if necessary, while declining to comment directly on recent yen movements.

Views and analysis

• Hirofumi Suzuki, Chief FX Strategist at Sumitomo Mitsui Banking Corporation, said that upward pressure on crude oil prices makes it easier for selling pressure on the Japanese yen to intensify.

• Suzuki added: “I do not believe there is a precise red line that would automatically trigger intervention, but the ¥160–¥161 per dollar range is likely being watched very closely by Japanese authorities.”

Japanese interest rates

• The Bank of Japan will meet on June 15–16 to assess the appropriate monetary policy tools for the world’s fourth-largest economy.

• Markets continue to price in roughly a 60% probability that the Bank of Japan will raise interest rates by a quarter percentage point at its June meeting.

• Investors are eagerly awaiting remarks from Bank of Japan Governor Kazuo Ueda later today for clues on whether the central bank intends to move forward with a rate hike in June.

US dollar

The US Dollar Index rose about 0.1% on Wednesday, extending gains for a third consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

The advance comes as investors remain cautious and reluctant to take on risk while awaiting further developments in negotiations between the United States and Iran aimed at ending the conflict and reopening the Strait of Hormuz.

US-Iran negotiations

• US President Donald Trump said he believes a framework agreement with Iran to extend the ceasefire could be reached within the coming week.

• Iran confirmed that it is still reviewing the final draft proposal and has not yet submitted its official response to the United States.

• US Secretary of State Marco Rubio stated that Iran has agreed to discuss aspects of its nuclear program that it had previously refused to negotiate.

• The US side continues to insist that sanctions relief will not be granted solely in exchange for reopening the Strait of Hormuz, and that any agreement must also address core issues such as Iran’s nuclear program.

After more than three months of fighting and intermittent negotiations, Washington and Tehran now appear, according to reports, to be on the verge of reaching an agreement that would bring their conflict to an end. However, according to sources in Washington, Tehran, and London who spoke exclusively to OilPrice over the past few days, the political and military drama of recent weeks may ultimately end as a loud story with limited practical consequences.

A Washington-based source working closely with legal operations at the US Treasury Department told the website over the weekend: “There is a very strong chance that the United States will end up with an agreement that looks remarkably similar to the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, although we may lose a little while Iran gains a little.”

But what are the prospects for the expected peace agreement? And what could happen to energy prices afterward?

US war objectives

From the American perspective, President Donald Trump identified four primary objectives from the outset of the war against Iran and its proxies in February, all of which received full backing from members of his administration at the time.

The first objective was to prevent Iran from acquiring a nuclear arsenal.

The second was to destroy or weaken Iran’s missile stockpiles and production capabilities.

The third was regime change.

The fourth was to end Tehran’s financing and arming of its regional proxies.

So how much progress has been made toward these goals?

Iran’s nuclear program

Regarding the nuclear program—the most important objective for Washington—the US Department of Defense announced that the Fordow Fuel Enrichment Plant had been rendered “inoperable.”

The above-ground enrichment facility at Natanz was also said to have been “completely destroyed,” while the underground laboratories suffered what were described as “extensive” damages.

The same applies to the Isfahan Nuclear Technology Center, which serves as a key hub for converting uranium into the gas required for enrichment activities.

However, up to 440 kilograms of uranium enriched to 60%, which the International Atomic Energy Agency lost track of last year, remains unaccounted for.

The agency also acknowledges that it does not know the full scope of Iran’s current activities, particularly at undisclosed sites.

Missiles and military capabilities

As for the second objective, US intelligence assessments indicate that roughly 70% of Iran’s pre-war ballistic missile stockpile remains intact.

At the same time, around 70% of its missile launchers have reportedly been destroyed.

Strikes targeting Iran’s Defense Ministry and military logistics facilities also destroyed 15 major weapons production sites linked to the development of advanced ballistic missiles.

Iran’s manufacturing capabilities were further eroded following US and Israeli attacks on three major steel plants in Mobarakeh, Khuzestan, and Sefid Dasht.

Nevertheless, US intelligence officials warned earlier this month that Iran’s defense industrial base is recovering faster than expected, aided by components supplied through covert networks originating in China.

Regime change

As for the third objective—regime change—Trump could argue that it was partially achieved through the elimination of former Supreme Leader Ali Khamenei and dozens of senior religious, political, and military figures in strikes carried out in coordination with Israel.

Despite that, Iran’s hardline Islamic system remains intact and continues to enjoy strong support from the Islamic Revolutionary Guard Corps, the ideological guardian of the 1979 revolution.

Dismantling the proxy network

The fourth objective has arguably seen the clearest success so far.

Operation “Epic Wrath” reportedly dismantled the command structure linking Tehran to its network of armed groups across the region.

The deaths of several key leaders transformed those groups into more independent regional actors rather than a coordinated and unified front.

According to US Central Command, Iran’s ability to use its proxies as a tool of regional power has suffered a major blow.

Trump and political considerations

“There are enough achievements here for the president to claim some form of victory to his supporters, allowing him to strike a deal that has become increasingly important with the approach of the November midterm elections,” the US source said.

Although Trump is legally barred from seeking another presidential term, he may still seek to preserve his family’s political influence in the future, which would require continued support from the Republican Party.

For that reason, he is closely watching the party’s electoral prospects and understands the direct relationship between energy prices, the US economy, and election outcomes.

Oil and elections

With gasoline prices remaining above $4 per gallon in the United States, historical data suggests that every $10-per-barrel move in crude oil prices typically translates into a change of roughly 25 to 30 cents per gallon at the pump.

Furthermore, every one-cent increase in average gasoline prices reduces annual consumer spending by more than $1 billion, weighing on economic growth.

The political significance is considerable. Since 1896, incumbent US presidents have won re-election 11 out of 11 times when the economy was not in recession during the two years preceding the election.

By contrast, incumbents facing elections during a recession succeeded only once in seven attempts.

A similar pattern applies to midterm elections.

Iran’s position

The challenge for the US negotiating team is that Tehran believes it cannot defeat the United States in this war, but it also does not believe it will be defeated.

Iran’s leadership and population have grown accustomed to the economic and political hardships resulting from more than four decades of international sanctions. As a result, continued pressure is not viewed as a decisive factor.

At the same time, the possibility of reaching an agreement that improves daily life for Iranians makes patience an acceptable strategy.

“We must remember that this time Iran holds a genuine bargaining chip through its continued control of the Strait of Hormuz, which is why it is seeking a better deal than the nuclear agreement reached during the Obama administration,” the US source added.

Bigger demands than the 2015 deal

A senior source working closely with Iran’s Oil Ministry said Tehran’s demands from Washington will be significantly greater than they were in 2015.

“We are now talking about tens of billions of dollars in compensation for war-related damages, although in the United States it will likely be presented under a different label, perhaps as an investment fund,” he said.

“In return, Iran will take its time implementing its commitments because the Revolutionary Guard believes that any peace agreement with Trump could simply be a way to maintain calm until the midterm elections and then resume the conflict afterward.”

What happens to oil prices?

If a peace agreement is signed and appears sustainable, a period of two to four weeks should be sufficient to begin clearing the bottlenecks that have built up in the Gulf and restoring normal shipping patterns.

A further two to four weeks may then be required for flows to return fully to normal levels, according to Vikas Dwivedi, Global Energy Strategist at Macquarie Group.

Under this base-case scenario, where markets become convinced that the agreement is genuine and sustainable, he expects a sharp and immediate selloff in oil.

“We expect a decline of around $20 per barrel within just one week,” Dwivedi said.

He added that this would likely be followed by two weeks of relative stabilization, before the market begins repricing logistical and financial factors.

“After that, we expect the market to find itself facing a significant supply surplus once again, as alternative sources remain available and oil flows through the Strait of Hormuz resume, potentially leading to an overshoot to the downside.”

He concluded: “Ultimately, we expect prices to return to levels more consistent with supply and demand fundamentals, settling within what we view as a fair-value range of $65 to $70 per barrel.”