Gold Falls Below $4,700 as Dollar and Oil Rise

SadaNews - The price of gold has declined as the United States' extension of the ceasefire with Iran leaves markets facing the implications of the Strait of Hormuz crisis, affecting energy security and keeping inflation risks high.

The precious metal dropped by as much as 1% to below $4,700 an ounce, reversing a gain from the previous session.

U.S. President Donald Trump stated that the truce agreed upon on April 7 will remain in effect indefinitely while Washington waits for Iran to present a new peace proposal, even though Tehran claims it does not plan to participate in negotiations at this time.

Trump's extension of the ceasefire marks a retreat from threats to resume bombing Iran if no agreement were reached by the Wednesday deadline.

Meanwhile, both sides are engaged in a battle for control over Hormuz, a vital energy waterway, with the aim of gaining leverage in potential truce negotiations. Both countries have imposed blockades on navigation in the area, and Iranian boats have fired on commercial vessels.

Rising Inflation Risks

Oil has risen for the fourth consecutive day, while a gauge for the dollar has edged up slightly, putting pressure on gold priced in U.S. currency.

The conflict, which has entered its eighth week now, has caused an unprecedented shock to energy supplies, increasing inflation risks, which is likely to urge central banks to keep interest rates unchanged for a longer period or even raise them. This has pressured the non-yielding metal, which has decreased by about 11% since the war began.

Rona O’Connell, head of market analysis for Europe, the Middle East, Africa, and Asia at trading company StoneX Group, wrote in a note that the precious metals market "will remain cautious and volatile." She added that "professional trading houses are hesitant to commit to large positions under such tense geopolitical conditions."

Spot gold fell by 0.8% to $4,699.28 an ounce at 10:56 AM Singapore time. Silver dropped by 2.3% to $75.92 an ounce. Both platinum and palladium also declined.

Silver Price

Silver prices were recorded near $76 an ounce.