Hormuz Temporarily Safe, Gold Immediately Rallies
Gold prices rose on Wednesday (April 8), approaching a three-week high, as the US dollar weakened after President Donald Trump agreed to a two-week temporary ceasefire with Iran. Spot gold rose 2.0% to US$4,801.35/oz at 8:54 a.m. ET, while US gold futures for June delivery rose 3.1% to US$4,828.55/oz.
Trump stated that he would suspend military action against Iran for two weeks and considered the US to have achieved its core military objectives. The agreement—brokered by Pakistan in last-minute diplomacy—is conditional on the safe opening of the Strait of Hormuz, a passageway for about 20% of global oil flows. Iran has signaled a conditional de-escalation: safe passage is possible during the ceasefire period if attacks are halted and shipping is coordinated with Iranian authorities. Trump also said the US would help ease traffic congestion in the strait.
The market responded quickly: oil prices reportedly fell more than 15% and risk assets rallied, while the dollar index weakened, making gold cheaper for holders of other currencies. However, gold had previously been under pressure when the oil surge fueled inflation concerns and reinforced expectations of prolonged high interest rates—an environment that typically limits the performance of non-yielding metals. Focus next shifts to Friday's US March CPI release, which is expected to show headline inflation rising on a monthly basis due to higher fuel costs, potentially influencing Fed policy expectations.
Source: Newsmaker.id
