Gold Rises Driven by Optimism for US-Israel and Iran Peace
Gold prices (XAU/USD) showed an upward trend on Wednesday (April 1), continuing the significant gains that began in the previous session. This increase was driven by hopes that the war between the US and Israel and Iran could soon end.
At the time of writing, XAU/USD was trading around $4,725, after previously touching $4,763 in the European session, its highest level in nearly two weeks. US President Donald Trump, in a statement from the Oval Office, stated that the United States "will be leaving Iran soon," adding that the military operation could end in two to three weeks. Trump asserted, "We will leave whether there is a deal or not." Meanwhile, Iranian President Masoud Pezeshkian stated that Iran has "a desire to end the conflict," but is seeking guarantees to prevent a recurrence of war.
These developments boosted risk sentiment in global markets, pushing oil prices down, weakening the US dollar (USD) from its highs, and boosting gold prices. However, tensions in the Strait of Hormuz persist, and oil prices remain high, raising concerns about inflation and risks to economic growth.
These geopolitical tensions have fueled expectations that the Federal Reserve (the Fed) may keep interest rates higher for an extended period, reducing the appeal of non-yielding assets like gold. According to the CME FedWatch Tool, the market expects the Fed to maintain interest rates at 3.50%-3.75% through 2026. However, if geopolitical tensions ease and oil prices decline significantly, expectations of Fed policy easing could resurface.
The latest US economic data showed that the ADP Employment Change rose by 62,000 in March, beating expectations of 40,000, although slightly down from 66,000 in February (which was revised from 63,000). US Retail Sales also rose 0.6% in February, exceeding the 0.5% estimate and recovering from a revised decline in January.
Next, speeches by Fed officials, including St. Louis Fed President Alberto Musalem and Fed Governor Michael Barr, will be in focus for clues regarding future monetary policy. Market attention will also be on Donald Trump, who is scheduled to deliver a speech on developments in Iran on Thursday at 01:00 GMT. (alg)
Source: Newsmaker.id
