Gold Jumps on 2-Week Ceasefire

Gold jumped more than 2% to above $4,800 per ounce on Wednesday, extending recent gains after President Donald Trump delayed his planned strikes on Iranian civilian infrastructure by two weeks to finalize talks on a potential resolution to the war. Trump also said the US had received a 10-point proposal from Iran that he described as a “workable basis for negotiations,” with the two-week window allowing the potential agreement to be finalized and implemented. Additionally, Iran has agreed to reopen the Strait of Hormuz for two weeks provided all attacks are halted, adding that transit would need to be coordinated with Iran’s Armed Forces, while Israel has also reportedly assented to the temporary ceasefire. Gold has tumbled as much as 25% peak-to-trough since the conflict began, as a surge in energy prices fueled inflation concerns and reinforced a hawkish shift in central bank outlooks.

Gold prices stabilized below $4,650 per ounce on Tuesday as the market entered a cautious wait and see mode ahead of President Trump’s 8 p.m. ET deadline. This consolidation follows reports that Iran cut off direct communications with the United States in response to Trump's civilization threats though it continues to engage through mediators regarding a potential ceasefire. While gold traditionally thrives on geopolitical instability its safe haven appeal is currently suppressed by a dominant US dollar and rising Treasury yields fueled by stagflation fears. Although the US launched strikes on military targets at Kharg Island overnight the lack of a sustained rally suggests that investors are pricing in military escalation. Domestic support remains thin as the surge in oil to $116 per barrel reinforces expectations that the Federal Reserve will maintain tight monetary policy. Long term support is anchored by the People’s Bank of China which bought 160,000 ounces in March.

Gold dropped to $4,620 per ounce on Tuesday, wiping out early gains and extending losses for a third straight session. The decline came as escalating Iran-US tensions, marked by President Trump’s ultimatum to Tehran and reports of explosions in Iran, failed to sustain safe-haven demand. Trump warned Iran that its "whole civilization will die" unless a "less radicalized" regime agrees to US terms by 8:00 pm ET, including reopening the Strait of Hormuz and a ceasefire. Iran vowed "beyond-the-region" retaliation if the US crosses its "red lines." Despite the turmoil, gold remains 12% below pre-conflict levels after its worst monthly drop since 2008 in March, as the crisis has strengthened the US dollar and dampened expectations of Federal Reserve rate cuts, further weighing on gold. Meanwhile, China’s central bank provided a rare boost, adding 160,000 troy ounces of gold in March, its largest purchase in over a year.