Gold rises following Trump's statements about the imminent end of the Iran War

SadaNews - Gold rose after U.S. President Donald Trump indicated that the war with Iran could be nearing an end, leading to a decline in the U.S. dollar and oil prices.

The precious metal increased by 0.9% to surpass $5,180 per ounce, recovering from losses in the previous session.

Trump stated that the conflict would be resolved "very soon," while an index measuring the strength of the dollar dropped by 0.1%, continuing the decline that began on Monday. Oil prices fell by more than 10% in a market that experienced volatile trading.

Inflation Pressures and Energy Prices

Any indication of the U.S. administration's willingness to end a conflict that has entered its second week could alleviate some of the pressures that have burdened gold in recent days.

The actual closure of the Strait of Hormuz, along with Iranian missile strikes on energy infrastructure, has led to rising oil prices and sparked fears of inflation.

This, in turn, reduced the likelihood of interest rate cuts by the Federal Reserve and other central banks. High borrowing costs are generally a negative factor for gold, as it does not yield a return.

Gold also faced additional pressures after being used as a liquidity source during a sell-off in global stocks as the war progressed.

Suki Cooper, global head of commodity research at Standard Chartered, said in an interview with Bloomberg Television: "We have seen gold perform the role it usually plays during high-risk events."

She added: "Initially, geopolitical risk premiums can push gold prices up, but when the need for liquidity increases, gold often becomes the first asset that investors think of selling, especially after it has performed well."

Challenges Facing Gold Holdings

However, despite the fluctuations in trading and the waning upward momentum, gold is still up about one-fifth since the beginning of the year. The disruptions caused by Trump in global trade and geopolitical tensions, along with threats to the independence of the Federal Reserve, have all contributed to support safe-haven assets.

But since the outbreak of the war, the volume of gold held in exchange-traded funds has decreased. Total holdings fell by about 30 tons last week, marking the largest weekly sell-off in over two years, according to data compiled by Bloomberg.

Daniel Ghali, senior commodity strategist at TD Securities, wrote in a note that gold holdings have faced challenges as markets discounted the possibility of interest rate cuts.

He added that there are some indications that gold traders may have taken advantage of the price drop in the spot market, but "the trading volume was limited and still within normal ranges."

Strong Gains Despite Volatility

During a press conference at his resort in Doral, Florida, Trump also said that the U.S. Navy would escort oil tankers through the Strait of Hormuz, the narrow sea passage off the coast of Iran through which about one-fifth of the world's oil and gas supplies flow.

However, the U.S. President did not provide further details on the plan, saying he did not expect the conflict to end this week.

Cooper noted that gold may find initial technical support near the $5,000 per ounce level if downward pressures continue, before showing a stronger support level near $4,500.

She added: "It is a highly liquid asset. We see it playing its role within investment portfolios, as it allows investors to meet their liquidity needs elsewhere." She continued, "We think it may remain under pressure for some time."

Gold rose in spot trading by 0.6% to $5,169.93 per ounce at 10:57 a.m. in Singapore. Silver increased by 2.4% to $89.06, while platinum and palladium fell slightly, and the Bloomberg dollar index remained practically unchanged after a 0.2% decline in the previous session.