Gold Falls as US Rate-Cut Odds Fade

Gold prices rose above $4,730 per ounce on Wednesday as bullion drew support from a retreating US dollar on signs of potential de-escalation in the Middle East. President Donald Trump stated that Iran requested a ceasefire, though he noted the US will only consider the deal once the Strait of Hormuz is fully operational and threatened further escalation if vessel attacks continue. These developments tempered the urgency for safe haven assets and helped pull oil prices back from recent highs while the dollar index retreated from a ten-month peak reached on Monday. Still gains were capped as the 10-year Treasury yield halted its decline following a 37bps rise in March amid fresh data showing the private sector added 62K jobs and retail sales grew by 0.6%. Despite the plunge of more than 13% in March gold remains sensitive to the Federal Reserve keeping rates unchanged this year as traders weigh a resilient US economy against shifting geopolitical volatility.

Gold prices rose to around $4,700 per ounce on Wednesday amid signs of de-escalation in Middle East tensions, which could lead to lower oil prices and ease concerns over further central bank rate hikes. President Donald Trump told aides he is willing to end the war against Iran even if the Strait of Hormuz remains largely closed, while regional reports suggested Iran’s President Masoud Pezeshkian may consider ending the conflict under certain conditions. Still, gains in bullion remained limited as easing geopolitical risks reduced safe-haven demand, while a firm US dollar and elevated Treasury yields continued to weigh on non-yielding assets. In March, gold plunged more than 13%, marking its steepest monthly drop since October 2008, and remains nearly 19% below its record highs set in late January. Traders are now closely watching upcoming US economic data and signals from the Federal Reserve for further direction on interest rate expectations.

Gold climbed above $4,570 per ounce on Tuesday, finding support at lower price levels, but remained on course for its largest monthly decline in over 17 years. The precious metal has plunged more than 13% in March, its steepest drop since October 2008, and sits nearly 19% below record highs set in late January. The selloff reflects a massive shift in investor sentiment, as the escalating Middle East war has fueled inflation fears and prompted a hawkish monetary policy outlook. With Iran effectively blocking the Strait of Hormuz, the conflict has driven oil prices higher, reinforcing expectations of tighter monetary policy. Traders have completely priced out the prospect of US rate cuts in 2026, a stark reversal from pre-war expectations of two cuts, despite Fed Chair Jerome Powell’s insistence that long-term inflation expectations remain stable. As a result, investors have fled to the US dollar as the preferred safe haven, exerting relentless pressure on gold.