TLDR
- Gold fell up to 1.1% on Wednesday, dropping to around $4,786 an ounce
- Prices eased from one-month highs as hopes grow for a US-Iran ceasefire
- A war-driven oil price spike fueled inflation fears, pushing gold down roughly 9% since the conflict began
- Trump said the Iran war is “close to over” and a deal could come before King Charles’s visit
- A two-week US-Iran ceasefire is in place until April 21, with both sides expected to return to talks
Gold prices pulled back on Wednesday as traders weighed early signs of progress in US-Iran peace negotiations against ongoing inflation pressures and a firmer dollar.
Spot gold fell around 1% to $4,795 an ounce during morning trading in London. Gold futures also declined, dropping 0.7% to $4,817.70 an ounce.
Despite Wednesday’s dip, gold is still up roughly 1.6% over the past week. That weekly gain reflects growing investor hope that the conflict, which started in late February, may be approaching an end.
The war began with joint US and Israeli strikes on Iran. Since then, energy markets have been severely disrupted, with the Strait of Hormuz — a key shipping route for roughly a fifth of the world’s oil — largely blocked.
Gold has fallen about 9% since the fighting started. In the early weeks of the conflict, a liquidity squeeze pushed investors to sell gold holdings to cover losses in other markets.
How the War Hit Gold
The war drove oil prices sharply higher, stoking fears of a global inflation surge. That led traders to expect central banks to hold or raise interest rates, which is bad news for gold since it pays no yield.
Investors also moved into the US dollar during the conflict, rather than gold, partly because the US is a net energy exporter and less exposed to the Hormuz disruption.
The dollar index is now only slightly above pre-war levels, as diplomatic progress takes some of the safe-haven demand away from the greenback.
“Markets have grown more confident that the Middle East crisis is moving toward a resolution,” analysts at ING said in a note.
US President Donald Trump said the war is “close to over” in interviews with Fox News and Sky News. He said a permanent ceasefire was “very possible” before the upcoming visit of King Charles to the US.
Trump also told reporters that fresh ceasefire talks with Iran could resume within two days, following a first round of negotiations held in Pakistan last weekend.
Ceasefire Timeline and Sticking Points
The US and Iran are currently observing a two-week ceasefire that runs until April 21. Mediators are working on three main issues: Iran’s nuclear program, the closure of the Strait of Hormuz, and war compensation.
The Associated Press, citing regional officials, reported that both sides are expected to return to the negotiating table and that mediator efforts to extend the ceasefire have made progress.
Tensions remain. The US military confirmed it has fully enforced the naval blockade against Iran. Israel also continues to carry out strikes on Hezbollah targets in Lebanon, which could complicate the broader ceasefire.
Israel and Lebanon held their first direct talks in decades in Washington this week. Israel has disputed Iranian claims that Lebanon was included in the current ceasefire agreement.
Pepperstone strategist Dilin Wu said gold is “caught between easing conflict expectations and still-unresolved inflation pressures,” adding that the Federal Reserve’s higher-for-longer rate stance means gold “faces a natural ceiling.”
Silver also fell on Wednesday, dropping 1.4% to $78.40 an ounce, after gaining more than 5% the previous session.
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