TLDR
- Precious metal climbed more than 1% to approximately $4,767 per ounce following a two-session selloff
- Trump announced an indefinite extension of the US-Iran ceasefire to facilitate diplomatic discussions
- Expected US-Iran diplomatic talks collapsed unexpectedly on Tuesday
- Kevin Warsh, nominated as Fed Chair, testified he would not guarantee rate reductions
- The precious metal has declined approximately 10% since the Iran crisis erupted in late February
The yellow metal staged a recovery on Wednesday following two consecutive sessions of declines, advancing more than 1% to approximately $4,767 per ounce. The upward movement followed US President Donald Trump’s announcement extending a ceasefire agreement with Iran, providing additional time for diplomatic efforts toward a peace settlement.
Spot gold advanced 0.9% to reach $4,763.66, while futures contracts increased 1.3% to settle at $4,782.21 per ounce. Silver surged 2.4% to $78.53 per ounce, accompanied by gains in platinum and palladium.
Despite the extended ceasefire, Middle Eastern tensions continue to simmer. The Strait of Hormuz remains blocked to commercial vessels. Iranian officials have declared they will not allow the waterway to reopen as long as the US maintains its naval blockade.
Iranian authorities characterized the blockade as an “act of war.” In response, Trump indicated he would postpone additional military operations pending Iran’s submission of a fresh proposal.
Diplomatic talks scheduled for Tuesday failed to materialize. US Vice President JD Vance called off his scheduled visit to Islamabad following Iran’s announcement that it would not participate in the negotiations.
Fed Nominee Adds Pressure on Gold
Gold faced additional headwinds from statements by Kevin Warsh, Trump’s nominee to head the Federal Reserve. During his Senate Banking Committee testimony on Tuesday, Warsh explicitly refused to promise interest rate cuts.
Warsh, who previously served as a Fed governor, emphasized the central bank’s need to remain independent from political influence. He indicated that a revised policy framework might be necessary to address continuing inflationary pressures should he receive confirmation.
Investors view Warsh as favoring a hawkish monetary stance, suggesting he would maintain elevated interest rates rather than pursuing aggressive cuts. Elevated interest rates typically pressure gold negatively, as the precious metal generates no yield or income.
His nomination initially triggered selloffs in gold and other precious metals during late January. The timeline for his confirmation process remains unclear.
Senior Republican lawmakers have resisted moving forward with Warsh’s confirmation while the Trump administration pursues an investigation into incumbent Fed Chair Jerome Powell. Powell is anticipated to continue serving beyond his term expiration on May 15 should confirmation proceedings face delays.
Gold Still Trapped in a Narrow Range
Gold has shed approximately 10% in value since hostilities with Iran commenced in late February. Throughout recent weeks, trading has remained confined within a range of roughly $4,700 to $4,900 per ounce.
Market observers note that current geopolitical risk levels appear fully reflected in pricing. Either a significant escalation in conflict or substantial shifts in economic fundamentals would be required to drive prices decisively beyond this range.
The US dollar weakened 0.3% on Wednesday, providing modest support by making dollar-denominated gold less expensive for international purchasers. Oil prices also retreated, with Brent crude trading near the $100 per barrel level.
Since the conflict’s onset, gold’s price action has more closely tracked risk assets such as equities rather than behaving as a traditional safe-haven, responding to each twist in the military situation.
Powell is projected to remain as Fed chair beyond the May 15 date, particularly if lawmakers delay Warsh’s confirmation proceedings.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
