Road Blockage, Deal Cancelled: Gold Remains Under Pressure
Gold prices weakened on Tuesday (April 21), recording their deepest daily decline in more than two weeks, after US President Donald Trump said he would extend a ceasefire with Iran despite the cancellation of planned diplomatic talks between the two countries. Bullion briefly fell as much as 3.1% before paring some losses, as the market assessed that the US blockade in the Strait of Hormuz continues to contain energy and inflation risks.
Pressure on gold came from a strengthening dollar and rising Treasury yields, which increase the opportunity cost of holding non-yielding assets. At the same time, oil remained above US$90 per barrel, maintaining inflationary pressures that could push central banks to hold interest rates longer or remain hawkish, thus limiting gold's recovery.
Sentiment was also influenced by the Fed's policy narrative. Fed Chair nominee Kevin Warsh called for a new framework to address persistent inflation, without detailing the interest rate implications. The market viewed Warsh as being more restrictive on inflation and less likely to follow through with aggressive rate cuts, potentially leading to a more gradual path for interest rate cuts.
Geopolitical uncertainty remains high. Trump declared the ceasefire extended until Iran's proposal is submitted and discussions are resolved, but the Hormuz blockade remains in place. This dynamic prolongs the risk of energy supply disruptions and increases volatility across assets—which could trigger repositioning and deleveraging in the precious metals market.
At the close in New York, spot gold fell 2.1% to US$4,720.04/oz (4:59 p.m.). Silver edged down 0.036% to US$76.70/oz, while platinum and palladium also weakened. The Bloomberg Dollar Spot Index rose 0.4%.
Going forward, the market will monitor concrete signals regarding the continuation of US-Iran talks, developments in the implementation of the Hormuz blockade and its impact on oil, as well as the direction of the dollar and US yields, which are key determinants for gold in the short term. (Arl)*
Source: Newsmaker.id
