Gold Rebounds Slightly, Hormuz and Interest Rate Direction Remain Restrained
Gold prices recovered some of the losses from the past two days after US President Donald Trump extended the ceasefire with Iran and opened up more time for new peace talks. However, bullion's gains remained limited as tensions in the Strait of Hormuz remained unabated and markets continued to weigh inflationary risks from energy shocks.
Gold briefly rose as much as 1.1% before paring some of its gains in US trading hours on Wednesday (April 22). Washington and Tehran remain locked in a power struggle in the Strait of Hormuz after a failed new round of negotiations, with both sides restricting shipping routes to increase leverage during the extended ceasefire. Trump said the ceasefire agreed on April 7 would remain in effect indefinitely until Iran submits a new peace proposal, while Tehran has stated it has no plans to enter negotiations anytime soon. The White House also emphasized that Trump has not set a firm deadline for accepting Iran's proposal.
In macro markets, oil prices edged higher, with Brent remaining above US$100 per barrel. At the same time, the dollar index reversed its decline after the previous session's gains, while Treasury yields moved higher—a combination that has made gold a tug-of-war. The war, now in its eighth week, continues to trigger energy supply shocks and maintain inflation risks, increasing the likelihood of central banks holding interest rates longer or even raising them, which theoretically creates a drag on non-yielding assets like gold.
Some market participants believe gold's position is now "cleaner" than before the conflict, when speculative activity and highly leveraged positions were more prevalent. Gold ETF inflows are also said to have recovered consistently over the past three weeks, although upward momentum has slowed in the past week, with indications of selling from Asia as prices approached the US$4,850 area. At the close, spot gold rose 0.4% to US$4,738.65/oz (4:50 p.m. New York), while silver gained 1.3% to US$77.71/oz; platinum and palladium also rose.
The market will now monitor the progress of the Iran proposal, the dynamics of the blockade and the shipping incident in Hormuz, the direction of the dollar and US yields, Brent's movement above US$100, as well as the consistency of ETF flows and the Asian selling response around the US$4,850 area. (Arl)*
Source: Newsmaker.id
