Gold prices rose in European trading on Tuesday, recovering from three-month lows as the US dollar weakened and global oil prices declined. The rebound comes as the ceasefire between Iran and Israel remains in effect, strengthening expectations that a final peace agreement between Washington and Tehran could be reached soon.

Lower oil prices are helping ease concerns about accelerating inflation, potentially giving major central banks more room to keep interest rates unchanged in the near term while increasing expectations for rate cuts over the longer term.

Price Overview

• Gold prices today: Gold rose 0.5% to $4,351.55, up from the opening level of $4,330.26, after touching an intraday low of $4,313.12.

• At Monday’s close, gold prices ended little changed after earlier falling to a three-month low of $4,268.92 per ounce.

US Dollar

The US Dollar Index fell 0.2% on Tuesday, extending losses for a second consecutive session and moving further away from the two-month high of 100.21 points, reflecting continued weakness in the US currency against a basket of major currencies.

As is well known, a weaker dollar makes dollar-denominated gold more attractive to buyers holding other currencies.

Beyond profit-taking activity, the dollar has weakened following Trump's success in halting military exchanges between Iran and Israel, alongside continued commitment to the diplomatic track aimed at ending the conflict and containing geopolitical tensions in the Middle East.

Global oil prices

Oil prices dropped by more than 2% on Tuesday as military tensions between Iran and Israel eased, reinforcing expectations that a broader Middle East peace agreement could be reached, helping reopen the Strait of Hormuz to stranded oil tankers and restore normal supply flows.

Developments in the Iran conflict

• Iran and Israel announced a temporary halt to military strikes.

• US President Donald Trump called on both sides to stop exchanging fire immediately.

• Israel believes the brief confrontation may strengthen its negotiating position.

• Israel has largely been excluded from the ongoing US-Iran peace talks.

• Pakistani Prime Minister Shehbaz Sharif stated that the “ultimate objective” of the Washington-Tehran peace negotiations is close to being achieved.

• Trump and Vice President JD Vance said Washington would declare a “complete victory” and expects a long-term settlement of the Iranian nuclear issue within the next two weeks.

• Trump: We are in the final stages of reaching an agreement with Iran and want to get it done.

• Trump: I do not believe there are any remaining sticking points with Iran, and we are very close to a deal.

• Trump: An agreement with Iran could be reached within “two or three days,” and the Strait of Hormuz would reopen “immediately.”

US interest rates

• Goldman Sachs expects the Federal Reserve to leave interest rates unchanged throughout 2026 and postpone any rate cuts until 2027, citing stronger economic activity and continued job growth.

• According to the CME FedWatch Tool, the probability of a Federal Reserve rate hike at the December meeting declined from 75% to 55%.

• Markets continue to price a 99% probability that rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at just 1%.

• Investors are closely monitoring key US economic releases this week, particularly the May inflation report due on Wednesday, which could significantly influence interest rate expectations.

Gold outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said gold is trading calmly as investors remain uncertain about the durability of the Iran-Israel ceasefire and are cautious ahead of this week’s important US inflation data, which will help shape expectations for Federal Reserve policy.

Waterer added that gold could still rise toward $5,500 by the end of the year, partly driven by continued central bank demand, although such a move would likely require lower oil prices, Treasury yields, and a weaker US dollar.

SPDR Gold Trust

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Monday, remaining at 1,019.92 metric tons, the lowest level since October 13, 2025.

The euro rose in European trading on Tuesday against a basket of global currencies, extending its recovery for a second consecutive session from a three-month low against the US dollar. The move was supported by buying interest at lower levels and improved risk appetite after the halt in military escalation between Iran and Israel, strengthening speculation that a final peace agreement in the Middle East may be approaching.

Lower global oil prices are also helping to ease concerns about accelerating inflation, supporting expectations that the European Central Bank may keep its monetary policy tools unchanged for an extended period this year.

Price overview

• Euro exchange rate today: The euro rose by around 0.15% against the dollar to $1.1548, up from the opening level of $1.1533. The session low was recorded at $1.1527.

• The euro closed Monday’s session up 0.1% against the dollar after earlier touching its lowest level in nearly three months at $1.1500.

US dollar

The US Dollar Index fell by approximately 0.15% on Tuesday, extending losses for a second consecutive session and moving further away from its two-month high of 100.21 points, reflecting continued weakness in the US currency against a basket of major and minor currencies.

In addition to profit-taking activity, the dollar has come under pressure following Trump’s success in halting the exchange of military strikes between Iran and Israel, while reaffirming commitment to the diplomatic path aimed at ending the conflict and containing geopolitical tensions in the Middle East.

Oil prices

Oil prices declined by more than 1% on Tuesday as military tensions between Iran and Israel eased, boosting expectations that a peace agreement in the Middle East may be near. Such an agreement could help reopen the Strait of Hormuz to stranded oil tankers and restore supply flows to normal levels.

Developments in the Iran conflict

• Iran and Israel announced a temporary halt to military strikes.

• US President Donald Trump called on both sides to cease hostilities immediately.

• Israel believes the brief confrontation may strengthen its position in negotiations.

• Israel has largely been excluded from the ongoing US-Iran peace talks.

• Pakistani Prime Minister Shehbaz Sharif stated that the “ultimate objective” of peace negotiations between Washington and Tehran is close to being achieved.

• Trump and Vice President JD Vance said Washington expects to declare a “complete victory” and reach a long-term settlement of the Iranian nuclear issue within the next two weeks.

• Trump said: “We are in the final stages of reaching an agreement with Iran, and we want to get this resolved.”

• Trump added: “I do not believe there are any major sticking points with the Iranians, and we are very close to reaching an agreement.”

European interest rates

• As oil prices declined, money markets reduced the probability of a 25-basis-point interest rate increase by the European Central Bank in June from 95% to 85%.

• Investors are now awaiting additional economic data from the eurozone, particularly inflation, unemployment, and wage figures, to reassess interest rate expectations.

• Reuters sources indicated that the European Central Bank is still highly likely to raise interest rates in June, given inflation forecasts that continue to point toward an undesirable scenario.

The Japanese yen edged higher in Asian trading on Tuesday against a basket of major and minor currencies as it attempted to recover from a six-week low against the US dollar. However, the currency remains within the intervention zone beyond ¥160 per dollar, a level widely viewed as a key threshold for potential action by Japanese monetary authorities to support the local currency.

The yen was supported by a weaker US dollar and lower global oil prices after Iran and Israel announced a halt to their exchange of strikes in response to a request from US President Donald Trump, who also reaffirmed that peace negotiations are continuing and that a final agreement between Washington and Tehran may be approaching.

Price overview

• Japanese yen exchange rate today: The US dollar fell by about 0.1% against the yen to ¥160.08, down from an opening level of ¥160.17. The session high was recorded at ¥160.28.

• The yen closed Monday’s trading up about 0.1% against the dollar after earlier touching a six-week low of ¥160.39.

The ¥160 threshold

Japanese authorities are closely monitoring movements in the foreign exchange market, particularly as the yen remains weaker than the critical ¥160-per-dollar level, which has long been viewed as a point that could trigger official intervention.

According to Reuters sources, Tokyo intervened several times in late April and early May to halt the yen’s decline. At that time, the exchange rate reached ¥160.72 per dollar, the weakest level since July 2024.

Japanese officials have repeatedly warned against excessive volatility in the yen and indicated that authorities could take decisive action against disorderly currency movements.

Finance Minister Satsuki Katayama reaffirmed that the government is “ready to take appropriate measures” if foreign exchange markets experience excessive or speculative moves.

US dollar

The US Dollar Index declined by about 0.1% on Tuesday, extending losses for a second consecutive session and moving further away from the two-month high of 100.21 points, reflecting continued weakness in the US currency against a basket of global currencies.

In addition to profit-taking activity, the dollar came under pressure after Trump successfully brokered a halt to the exchange of military strikes between Iran and Israel, while emphasizing continued commitment to the diplomatic path to end the conflict and contain geopolitical tensions in the Middle East.

Oil prices

Oil prices fell by more than 1% on Tuesday as military tensions between Iran and Israel eased, boosting expectations that a broader peace agreement in the Middle East may be near. Such an agreement could contribute to reopening the Strait of Hormuz to stranded oil tankers and restoring supply flows to normal levels.

Iran conflict developments

• Iran and Israel announced a temporary halt to military strikes.

• US President Donald Trump urged both sides to cease hostilities immediately.

• Israel believes that the brief confrontation may strengthen its position in negotiations.

• Israel has largely been excluded from the ongoing US-Iran peace talks.

• Pakistani Prime Minister Shehbaz Sharif stated that the “ultimate objective” of peace negotiations between Washington and Tehran is close to being achieved.

• Trump and Vice President JD Vance said Washington expects to declare a “complete victory” and reach a long-term settlement of the Iranian nuclear issue within the next two weeks.

Japanese interest rates

• With oil prices declining, market pricing for a 25-basis-point rate hike by the Bank of Japan at its June meeting eased from 85% to 75%.

• Investors are now awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations.

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

As one deadline after another passes without a peace agreement in the ongoing conflict involving the United States and Israel on one side and Iran on the other, the likelihood of failing to reach a decisive settlement in the coming months continues to rise. There are strong reasons why Washington, under President Donald Trump, may be comfortable with maintaining the conflict in a state of stalemate, including the effective closure of the Strait of Hormuz, one of the world's most important energy chokepoints. Similar reasons also exist for Tehran, where the Islamic Revolutionary Guard Corps appears inclined to preserve the status quo.

As a result, both sides may simply be using negotiations to calm domestic opposition without any genuine intention of ending the conflict quickly. If this scenario proves correct, the key question becomes: what are the short- and long-term implications for oil markets?

For the Islamic Revolutionary Guard Corps, which serves as the ideological guardian of Iran’s 1979 revolution and oversees the export of its influence through regional proxies, any peace agreement with the United States could become an existential threat. The core of every agreement proposed by Washington, from the original nuclear deal under President Barack Obama to the latest version under Trump, has ultimately revolved around dismantling the Revolutionary Guard in its current form.

The underlying concept promoted by the United States and its allies is to gradually dismantle the Guard’s financial, political, and economic structure inside Iran and integrate it into the regular military. Washington believes this process would eventually lead to the end of the Islamic system and its replacement with a democratic government.

For Washington, this objective remains part of its long-term strategy toward Iran. Given the catastrophic conclusions reached by Pentagon studies regarding any ground invasion of Iran, the US administration views prolonged sanctions pressure as the only realistic path toward achieving that goal.

However, the American strategy extends beyond Iran and is also linked to its broader rivalry with China. The United States seeks to reduce Chinese influence around the Strait of Hormuz after Beijing expanded its presence through extensive partnerships with Tehran. Washington is also working to secure other strategic routes around the world, including the Panama Canal and northern maritime corridors, as part of the global competition for influence with China.

From this perspective, a prolonged stalemate in the Gulf provides Washington with additional time to reshape the global balance of influence at Beijing’s expense.

At the same time, the United States is pursuing what some describe as the “Trump Doctrine,” which aims to reinforce American dominance in the Western Hemisphere by expanding oil production within the United States and among regional partners such as Venezuela, Brazil, and Argentina in order to offset any prolonged shortfall in Middle Eastern supplies.

Although oil prices have not yet risen as sharply as many expected since the conflict began, this is largely due to temporary and exceptional factors, most notably the massive release of strategic petroleum reserves and the elevated commercial inventories that existed before the outbreak of hostilities.

In March, member countries of the International Energy Agency launched the largest strategic reserve release in history, injecting 400 million barrels into the market. However, this measure is temporary, with more than 250 million barrels already consumed during April and May alone.

At the same time, US oil production was running at record levels of 13.6 million barrels per day, yet major oil companies showed little willingness to increase output rapidly, arguing that they were already operating close to maximum capacity.

Global markets are also drawing down commercial inventories at an unprecedented pace, while the closure of the Strait of Hormuz and damage to energy infrastructure across the Gulf have disrupted between 9 and 13 million barrels per day of production and refining capacity.

The International Monetary Fund has warned that global oil inventories could fall to their lowest level in five years by July.

At that point, the current period of relative calm in oil prices could begin to unravel quickly. Under the World Bank’s “major disruption” scenario, Brent crude could climb into a range between $120 and $135 per barrel by the end of the summer.

Such an increase would be driven by refiners seeking alternatives to heavy crude supplies from the Middle East, as well as shortages in refined petroleum products caused by declining commercial inventories.

Over the longer term, markets may once again focus on Iran’s longstanding warning that oil could reach $200 per barrel. The longer the crisis persists, the larger the risk premiums on prompt supplies are likely to become, especially once governments exhaust their strategic reserves.

That could trigger a new wave of aggressive buying that pushes prices toward record highs and potentially drives the global economy into a sharp slowdown as it adapts to a new era of significantly higher energy prices.