Spot gold prices climbed steadily during Asian trading hours on Friday, May 8, reversing a sharp decline seen in the previous New York session. According to Bloomberg, the price increase was driven by signs of buying interest, even as concerns over conflicts in the Strait of Hormuz persisted. Regarding US-Iran tensions, sources indicated that Iranian officials are expected to formally respond today to the US assessment of a 14-point proposal.
During early trading on Thursday in New York, spot gold fell significantly from its intraday high of $4,764.87 per ounce. By the New York close, gold was trading near $4,686 per ounce.
The escalation came after Iran fired on three US destroyers sailing in the strait, prompting US strikes on military targets inside Iran. This development cast doubt on the prospects of a previously anticipated agreement, which had been a key factor supporting market sentiment.
In Friday's Asian session, spot gold reached a high of $4,732.81 per ounce, rising nearly $46 on the day.
Bloomberg reported that gold advanced as buying interest emerged following substantial purchases by the Chinese central bank, despite renewed Middle East clashes threatening a fragile ceasefire.
As the US seeks to extricate itself from the conflict—now in its third month—and awaits Iran’s response to its proposal to reopen the Strait of Hormuz, a critical energy shipping route, recent clashes have heightened tensions further.
Since the outbreak of hostilities involving Iran, gold prices have fallen approximately 11%.
The near-closure of the Strait of Hormuz and the resulting energy price volatility have fueled inflation concerns, reinforcing expectations that interest rates will remain elevated for longer. Since gold pays no interest and is priced in US dollars, higher rates and a stronger dollar typically weigh on its price.
On the US-Iran front, latest reports from Pakistan on May 8 indicated that Iran is reviewing the US response to a 14-point proposal. The proposal aims to formally end hostilities and open a 30-day negotiation window covering issues such as Iran’s nuclear program, sanctions relief, and safe passage through the Strait of Hormuz.
Diplomatic sources in Pakistan stated that Iranian officials are expected to issue a formal reply on May 8, with the US awaiting Iran’s stance on key issues.
Iran recently submitted the new 14-point proposal to the US via mediator Pakistan. Key points include guarantees against further military aggression, compensation payments, and the establishment of a new management mechanism for the Strait of Hormuz.
Traders are also closely watching US nonfarm payrolls data, scheduled for release later on Friday, for clues on the direction of interest rates.
A Bloomberg survey showed that economists expect a median increase of 65,000 jobs in April, with the unemployment rate holding steady at 4.3%. In March, job gains had surged by 178,000.
Amid the war’s shadow over economic prospects and heightened uncertainty, some Federal Reserve officials have downplayed expectations of a return to monetary easing—a tone also reflected in last week’s post-policy meeting statement.
