Gold Climbs Above $4,350 as Iran Accord and Record Central Bank Hoarding Converge

Gold rallied to $4,355 on a US-Iran ceasefire deal and a record shift of central bank reserves into bullion, but the Fed's stance could temper gains.

Gold pushed past $4,355 an ounce on Monday, notching a 2.72% daily gain as a surprise US-Iran framework agreement added fresh momentum to a rally already fuelled by the biggest shift in central bank reserve allocations in decades. Since Thursday alone, the precious metal has added roughly $300.

The catalyst came from the diplomatic front: the United States and Iran digitally signed a deal to end hostilities, with President Trump, Vice-President Vance and Iranian parliamentary speaker Ghalibaf putting pen to virtual paper. A formal ceremony is set for Friday in Geneva. The pact includes reopening the Strait of Hormuz and lifting the naval blockade that had disrupted energy flows. The dollar index tumbled to 99.38, making bullion cheaper for non-US buyers, while Brent crude sank about 5% to around $83 a barrel, easing inflation fears and further underpinning gold.

Yet the short-term price action sits atop a deeper structural transformation. The European Central Bank’s latest annual report, released in June, documents that gold accounted for 27% of global currency reserves at the end of 2025, overtaking US Treasuries, which fell to 22%. Central banks now hold more than 36,000 tonnes of the metal, approaching the levels last seen during the Bretton Woods era of the 1970s. ECB President Christine Lagarde cited geopolitical tensions as the primary driver.

The buying spree accelerated early this year: net purchases of 244 tonnes in the first quarter pushed global demand up 74% year-on-year. The World Gold Council reports that new buyers have entered the market, including Guatemala, Indonesia and Malaysia. On the supply side, mine output edged up only marginally in Q1, keeping the market tight.

All eyes now turn to the Federal Reserve, which holds its first policy meeting this week under new Chairman Kevin Warsh. Markets overwhelmingly expect rates to remain unchanged, but the focus will be on the updated dot plot. If the Fed signals that any rate cuts planned for later in 2026 are off the table, gold could face short-term headwinds. Justin Lin of Global X Management said the metal has further room to run provided the Iran agreement holds and shipping through the Strait of Hormuz resumes smoothly. The detailed terms are due within 48 hours.

Not everyone is celebrating. Bundesbank President Joachim Nagel warned that it is too early to declare victory; restoring oil production and normalising supply could take months, and inflation risks persist. Commerzbank called the market reaction “very positive” but noted that the war has already cost Germany and the eurozone an estimated 0.4 percentage points of economic growth. For now, gold miners are riding the rally, while energy stocks struggle under falling crude prices. Whether the Geneva ceremony on Friday solidifies the ceasefire or sows new doubt will likely determine the metal’s next move.