Gold Continues to Rise Amid Expectations of an End to the Iran War

SadaNews - Gold has extended its gains for the third consecutive day amid signs that the war with Iran may be nearing its end, as traders shift their focus from interest rate hikes to long-term economic slowdown risks.

The precious metal rose by as much as 1.2%, surpassing $4,700 an ounce, adding to gains of 3.5% in the previous session.

U.S. President Donald Trump stated that he expects the United States to end the war with Iran within two to three weeks, indicating that America has largely achieved its military objectives and will leave it to others to reopen the Strait of Hormuz.

Stocks rose while the U.S. dollar declined. Bond traders also began to reduce their bets on central banks raising interest rates to curb inflation risks stemming from the conflict, instead focusing on assessing the war's impact on economic growth.

Federal Reserve Chairman Jerome Powell had earlier said this week that long-term inflation expectations remain stable.

Yuxuan Tang, the Head of Interest Rate and Currency Strategy in Asia at JP Morgan Private Bank, stated, "The appeal of gold as a safe haven tends to resurface when the narrative shifts from inflation to growth risks."

She added, "We are highly convinced that the Federal Reserve has limited room to raise interest rates in this cycle," noting that it will instead focus on labor market pressures. Low interest rates are a supportive factor for gold, which does not generate yield.

Despite Recovery, Worst Monthly Performance Since 2008

Despite recovering over the past few days, gold’s decline of about 12% in March represents its worst monthly performance since October 2008.

The Iran war, which has entered its fifth week, has disrupted global markets and strangled energy supplies and other commodities, raising concerns about rising inflation at the expense of gold's traditional appeal as a safe haven.

Nevertheless, Goldman Sachs remains among the banks that maintain an optimistic outlook on gold. In a note published on Tuesday, analysts Lina Thomas and Dan Stroeven kept their price forecasts for the end of the year at $5,400 an ounce, citing continued central bank purchases and the expectation of two additional interest rate cuts in the United States this year.

Trump is scheduled to deliver a speech to the nation on Wednesday evening "to provide an important update on Iran," according to White House spokesperson Caroline Levitt in a post on the platform X.

The president’s positions have fluctuated between asserting that a resolution is near and warning of an escalation of military operations.

Iran, for its part, has set conditions for ending the fighting, including control over the Strait of Hormuz, the vital waterway that was previously a transit point for nearly a fifth of the world’s oil and liquefied natural gas supplies before the war. State media quoted President Masoud Bezhakian as saying the country is ready to end the war if its demands are met.

As of 9:36 a.m. Singapore time, spot gold prices rose by 0.6% to $4,695.67 an ounce. Silver dipped by 0.9% to $74.50, while both platinum and palladium rose. The Bloomberg Dollar Spot Index, which measures the performance of the U.S. dollar, also decreased slightly after a 0.6% decline on Tuesday.