Gold prices moved higher on Wednesday, supported by a softer U.S. dollar, after Donald Trump announced that the ceasefire with Iran would be extended, raising cautious expectations of a more stable geopolitical backdrop in the Middle East.
By 06:07 ET (10:07 GMT), spot gold was up 0.7% at $4,750.76 per ounce, while futures advanced 1.1% to $4,769.41. The precious metal was rebounding after losses in the previous session, which followed comments from Federal Reserve chair nominee Kevin Warsh indicating he had not committed to lowering interest rates.
The decline in the U.S. dollar added support to bullion, as a weaker currency typically boosts demand by making gold cheaper for international buyers. The dollar index, which tracks the greenback against a basket of six currencies, was down 0.1%.
The dollar had surged in March as investors sought safe-haven assets, betting that strong U.S. energy exports would cushion the economy from disruptions tied to the Strait of Hormuz. More recently, however, the currency has retreated toward pre-conflict levels, with some analysts suggesting that geopolitical tensions may have already peaked.
“[T]he majority of the public comments we see, from both sides, at present, largely seem aimed at obtaining negotiating leverage, as opposed to being geared towards seeking actual re-escalation of the conflict,” said Michael Brown, Senior Research Strategist at Pepperstone.
Focus shifts to ceasefire developments
In a social media post on Tuesday, Trump said the ceasefire extension had been agreed at the request of Pakistan, which has often acted as a mediator between Washington and Tehran.
Iran’s foreign ministry spokesperson acknowledged the extension in remarks reported by the Associated Press.
Uncertainty remains over the direction of future negotiations. A planned trip by U.S. Vice President JD Vance to Pakistan for further talks was postponed after Iranian state media said their delegation viewed the discussions as a “waste of time because the U.S. prevents reaching any suitable agreement.”
Pakistani officials, however, are continuing efforts to keep dialogue alive, with Islamabad awaiting confirmation on when Iran may send representatives for another round of discussions. Earlier talks this month ended without a deal.
Hormuz tensions continue to weigh
Disruptions in the Strait of Hormuz remained a key concern on Wednesday.
U.K. Maritime Operations reported an attack on a container vessel, shortly after another ship was struck by a boat linked to Iran’s Islamic Revolutionary Guards Corps.
Trump has also said that the U.S. naval blockade of Iranian ports and coastline—described by Iran’s foreign minister as an “act of war”—will remain in place. He added that Iran is “collapsing financially!” and wants the strait to be “opened immediately” because Tehran is “Starving for cash.”
Tanker movements through the Strait of Hormuz, a crucial corridor for global oil flows, have been severely restricted since the conflict began in late February.
Oil prices edged higher, with Brent crude trading just below $100 per barrel. The increase compared with pre-war levels has heightened concerns about inflation, which could weigh on global growth and push central banks toward tighter monetary policy.
As a non-yielding asset, gold typically faces headwinds when interest rates rise.
Leave a Reply