Gold Holds Steady After Volatile Trade

Gold steadied near $4,700 per ounce on Thursday following sharp swings in the previous session, as investors assessed a fragile ceasefire in the Middle East amid sporadic fighting and lingering uncertainty over the reopening of the Strait of Hormuz. Iranian media reported that oil tanker transit through the strait had been halted after Israeli strikes on Lebanon, while a senior Iranian official said three provisions of the ceasefire proposal had already been breached. Meanwhile, US Vice President JD Vance said there are indications the strait may begin reopening as he leads a US delegation to Islamabad for direct talks with Iran. Oil prices rebounded slightly and the dollar and bond yields edged higher, maintaining downward pressure on gold. On Wednesday, bullion climbed as much as 3.3% following the ceasefire announcement, before giving up nearly all those gains as investors took profits amid a broader risk-on rally in global equities.

Gold prices pared most of the earlier gains but remained in positive territory on Wednesday, holding above $4,700 per ounce, as traders continued to assess developments in the Middle East and their implications for the economic and monetary outlook. The US and Iran agreed to a temporary two-week ceasefire, including the reopening of the Strait of Hormuz and a suspension of US military strikes. In response, oil prices plunged, the dollar weakened, and bond yields declined, all of which supported demand for bullion. However, some investors moved to take profits as risk appetite returned to global equity markets. At the same time, caution persisted amid reports of localized airstrikes in the region, underscoring the fragility of the Pakistan-brokered truce. Meanwhile, minutes from the FOMC’s March meeting showed policymakers were concerned that Middle East hostilities could lead to sustained inflation requiring further rate hikes, although they still expected one rate cut this year.

Gold prices advanced over 1% to trade near $4,750 per ounce on Wednesday, paring earlier intraday gains after the United States and Iran reached a temporary two-week ceasefire agreement. The breakthrough, which includes the reopening of the Strait of Hormuz and a suspension of US military strikes, initially propelled bullion toward three-week highs of $4,850 as the US dollar index slumped to a four-week low. However, gold later retreated from these peaks as the plunge in crude oil prices significantly cooled the energy-driven inflation fears that had previously underpinned the metal's safe-haven appeal. While falling bond yields and renewed bets on Federal Reserve interest rate cuts later in 2026 provided a floor for the non-yielding asset, investors began taking profits as risk appetite returned to global equity markets. Market participants remain cautious due to reports of localized air attacks in the region, which highlight the fragility of the Pakistani-brokered truce.