Gold Recovers After Trump Extends Iran Ceasefire
Gold (XAU/USD) recovered on Wednesday (April 22), paring some of the previous day's losses after US President Donald Trump extended a ceasefire with Iran just hours before it was due to expire. At the time of writing, XAU/USD was trading around $4,750.
This recovery comes after gold briefly touched a one-week low of $4,668 on Tuesday, while market volatility remained high amid rapidly changing geopolitical developments. Intraday movements indicate the market remains vulnerable to risky headlines.
The ceasefire extension comes amid Iran's refusal to negotiate "under the shadow of threats" and its refusal to attend the second round of peace talks expected to take place in Pakistan. Trump said the extension was taken at the request of Pakistani leadership to allow Iran time to develop a unified negotiating proposal.
However, the US has not yet lifted the naval blockade on Iranian ports. Trump stated that the US military would continue the blockade and extend the ceasefire until the proposal is submitted and discussions are completed, while Iran has not officially accepted the extension—leading to significant uncertainty regarding the diplomatic path.
Fundamentally, the ceasefire extension eased immediate fears and supported a modest recovery in gold, but the rally remains fragile due to gold's recent more risk-sensitive dynamics—primarily influenced by movements in the US dollar and oil prices. This means that gold's direction is determined not only by hedging needs, but also by changes in risk sentiment.
The main obstacle comes from the prospect of prolonged high interest rates. Rising inflation risks due to high energy costs and still-very-constrained supply through Hormuz have also weighed down the chances of a Fed rate cut. The latest data also showed Retail Sales rose 1.7% month-on-month in March (after 0.7% in February) and CPI rose 0.9% month-on-month (from 0.3% previously). With a relatively light US economic calendar on Wednesday, the market is likely to focus on developments in the ceasefire, the status of the blockade, and signs of a recovery in energy flows. (gn)
Source: Newsmaker.id
