Gold Steady, Hormuz Stalemate Keeps Inflation Risks High
Gold prices moved within a limited range after the United States extended a ceasefire with Iran, but the market remained clouded by the standoff in the Strait of Hormuz, which is pressuring energy security and keeping inflation risks high. Bullion hovered around $4,725 an ounce in early trading.
Gold had previously risen 0.4% in the previous session, halting a two-day decline. US President Donald Trump said the April 7 ceasefire would remain in effect indefinitely pending Iran's submission of a new peace proposal, while Tehran reportedly has no plans to enter negotiations anytime soon.
The extension of the ceasefire is seen as a shift from its previous threat to resume bombing if a deal is not reached by Wednesday's deadline. However, the US and Iran remain locked in a struggle for control of Hormuz to increase their bargaining power, with both sides maintaining their respective blockades in the region and reports of Iranian speedboats firing on commercial vessels.
The conflict, now in its eighth week, has triggered energy supply shocks, raising inflation risks and strengthening the case for central banks to hold interest rates longer or even raise them. This tighter interest rate environment is a drag on non-yielding gold, and gold prices are said to have fallen by around 10% since the war began.
From a market perspective, Rhona O'Connell of StoneX believes the precious metals market is likely to remain cautious and volatile, as professional trading houses are reluctant to add large positions amidst still-sensitive and volatile geopolitical conditions.
In recent trading, spot gold fell 0.3% to $4,727.65 per ounce (7:34 a.m. Singapore time). Silver fell 0.3% to $77.48, while platinum and palladium also weakened, with the Bloomberg Dollar Spot Index trading slightly lower.
5 key points (detailed & simplified):
- Gold held steady around $4,725/oz, after rising 0.4% in the previous session and halting a two-day decline.
- Trump extended the US-Iran ceasefire indefinitely pending a new proposal from Iran; Iran is reportedly not ready to enter negotiations immediately.
- The Hormuz standoff continues: both sides maintain the blockade, and there are reports of Iranian speedboats firing on commercial vessels.
- Energy supply shocks keep inflation risks high, increasing the likelihood of interest rates being held longer/rising, which puts pressure on non-yielding gold.
- Spot gold -0.3% to $4,727.65; silver -0.3% to $77.48; the Bloomberg Dollar Index weakened slightly. (Asd)
Source: Newsmaker.id
