Gold prices recovered slightly after the U.S. agreed to extend the ceasefire with Iran, but remained weighed down by a stronger U.S. dollar and the continued U.S. blockade of the Strait of Hormuz.
At 16:45 ET (20:45 GMT), spot gold XAU/USD trimmed some of its losses but was still down 2.2% to $4,676.04/oz, while Gold Futures fell 2.8% to $4,713.04/oz.
"Gold has put in an impressive recovery since dropping to $4,100 a month ago. But it now shows signs of having run out of upside momentum as it consolidates around the $4,800 area. The daily MACD has flattened out around the ‘neutral’ level having been rather oversold at the end of March. Yet again, gold has fallen under the spell of the U.S. dollar, which means that any rally in the greenback is weighing on it, as things stand," David Morrison, senior market analyst at Trade Nation, said.
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U.S.-Iran ceasefire extended On Tuesday, President Donald Trump announced he would extend the U.S.-Iran ceasefire until Tehran could present a unified negotiating proposal. This decision followed media reports suggesting a possible breakdown in additional planned peace talks between the two nations. "Based on the fact that the Government of Iran is seriously fractured, not unexpectedly so and, upon the request of Field Marshal Asim Munir, and Prime Minister Shehbaz Sharif, of Pakistan, we have been asked to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal," the president said on his Truth Social service. The New York Times earlier in the day reported that U.S. Vice President JD Vance’s trip to Islamabad in Pakistan for more talks was on hold after Tehran failed to respond to U.S. negotiating positions, citing a U.S. official with direct knowledge of the matter.
Iran’s Fars News Agency had said that the country was yet to decide on attending the talks, citing the foreign ministry’s spokesperson. State media also said that Tehran wanted the U.S. to lift its blockade on vessels entering and exiting Iranian ports before peace talks could restart.
Iran’s foreign minister Abbas Araghchi said the blockade was "an act of war and thus a violation of the ceasefire."
Oil prices advanced on Tuesday, and were hovering well above pre-war levels due in large part to a continued closure of the Strait of Hormuz, a vital conduit for a fifth of the world’s oil. The effective shuttering of the waterway was reinstated over the weekend, despite having been temporarily reopened to commercial shipping traffic on Friday.
The jump in oil prices due to the strait’s shuttering has fueled fears that a bout of inflationary pressures could hit countries around the world, potentially leading central banks to hike interest rates. This could bode poorly for non-yielding assets like gold, which tend to underperform in elevated rate environments.
Dollar firms amid Warsh’s Senate confirmation hearing Denting the appeal of gold was a strengthening in the dollar, which can make bullion more expensive for overseas buyers. A tracker of the greenback on Tuesday hit a near two-week high on safe haven demand and commentary from Warsh.
