Gold prices surged over 2% on Wednesday, with COMEX futures reaching $4,657.70 per ounce and spot gold touching $4,662.70, as hopes for a U.S.-Iran peace deal sent shockwaves through commodity and currency markets. The rally was ignited after President Trump announced a pause in “Project Freedom,” the U.S.-led effort to guide commercial ships through the Strait of Hormuz, citing “great progress” toward a broader agreement. “We have mutually agreed that... Project Freedom will be paused for a short period of time to see whether or not the Agreement can be finalized and signed,” the White House stated.
The dollar index dropped 0.5%, making gold cheaper for foreign buyers, while oil prices retreated on a shrinking geopolitical risk premium. “The drop in oil prices is attributed to a reduced geopolitical risk premium,” said Kelvin Wong, senior market analyst at OANDA. A fragile ceasefire between the U.S. and Iran, confirmed by Defense Secretary Pete Hegseth, held despite a cargo vessel being struck near the strait—a reminder that tensions haven’t fully cooled.
For crypto markets, the macro shifts are critical. Bitcoin often tracks gold’s safe-haven moves, and a declining dollar boosts its appeal. But the path forward is clouded: bond traders are now pricing in a higher probability of a Federal Reserve rate hike rather than a cut, as inflation fears persist. ING strategists Warren Patterson and Ewa Manthey warned that “the main downside risk is a stronger dollar or renewed Fed pushback on easing.” A rate hike would diminish the allure of non-yielding assets like gold—and by extension, Bitcoin.
Gold’s inverse correlation with oil over the past seven sessions, noted by Commerzbank’s Barbara Lambrecht, kept the metal near a one-month low on Monday before the rebound. MKS PAMP’s Nicky Shiels described precious metals as caught in a “structural positioning paradox,” where dollar investment is high but contracts are light. “The medium-term bull case on debasement... remains intact, but near-term new highs require generalist institutional capital,” she said.
Silver jumped 3.5% to $76.17, and platinum and palladium also rose. All eyes now turn to the upcoming U.S. non-farm payrolls report, which will shape the Fed’s rate path. For Bitcoin, a sustained gold rally and a dovish tilt could provide the catalyst for a leg up, but rate hike fears may cap gains. The crypto market remains tightly linked to these macro forces, and a de-escalation in the Middle East could shift capital flows toward risk assets.
