Gold Rises on Fed Rate Cut Bets

Gold stabilized above $4,400 per ounce on Tuesday after dipping to four-month lows around $4,100 at the start of the week, as investors assessed the postponement of US strikes on Iranian energy infrastructure and the possibility of negotiations to end the conflict. President Donald Trump’s announcement of a five-day delay in planned strikes was viewed as an effort to manage oil prices, with oil benchmarks plunging about 10%. The dollar and Treasury yields also retreated following the announcement, offering additional support to gold. However, Tehran denied that any negotiations were underway, while Israel continued its attacks on Iran. The outcome of any talks and the potential reopening of the Strait of Hormuz remain uncertain, keeping inflation risks elevated. Gold had fallen as much as 25% from its March peak as surging energy prices fueled inflation concerns and bolstered expectations of interest rate hikes.

Gold pared losses to trade above $4,480 per ounce on Monday as global markets experienced extreme whiplash following Donald Trump's surprise announcement of a five day pause in planned strikes against Iranian energy infrastructure. The metal initially plunged to its lowest level since January as surging oil prices and hawkish central bank signals shifted the market narrative toward a stagflationary shock. However gold trimmed early losses to trade higher as the potential for de-escalation eased the pressure on non-yielding assets from soaring Treasury yields. While Tehran denied the existence of productive talks, the development suggested that the US administration is moving to limit the energy price surge that decimated global risk appetite. Consequently the safe haven premium remained supported by conflicting reports regarding the Strait of Hormuz and potential joint control over the waterway.

Gold trimmed early losses Monday, trading 3% lower at $4,350 per ounce, after President Trump postponed strikes on Iran for five days, claiming "productive conversations" with Tehran. However, Iran’s state-run Fars News Agency dismissed the claim, reporting no direct or indirect talks with the US and suggesting Trump’s retreat followed Iran’s threat to target all power plants in the region. Despite the temporary reprieve, gold extended its decline for a ninth straight session, hitting its lowest level since early January as the Middle East conflict fueled inflation fears. Last week, gold plunged over 10% amid soaring oil prices and central bank hawkishness, with markets now pricing in a Fed rate hike by year-end. Compounding the pressure, major economies may sell gold reserves to mitigate the war’s economic impact.