Key Highlights
- Gold prices advanced more than 1% to approximately $4,767 per ounce following a two-session slump
- President Trump announced an indefinite extension of the US-Iran ceasefire to facilitate diplomatic negotiations
- Expected US-Iran peace negotiations collapsed unexpectedly on Tuesday
- Federal Reserve Chair nominee Kevin Warsh stated he would not pledge to reduce interest rates
- Gold has declined approximately 10% since the Iran conflict erupted in late February
Gold prices 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 decision to extend the ceasefire with Iran indefinitely, providing additional time for diplomatic efforts toward a peace agreement.
Spot gold increased 0.9% to $4,763.66, while gold futures advanced 1.3% to $4,782.21 per ounce. Silver surged 2.4% to $78.53 per ounce, with both platinum and palladium posting gains as well.
Despite the ceasefire prolongation, Middle Eastern tensions continue to simmer. The Strait of Hormuz remains blocked to maritime traffic. Iranian officials have stated they will not reopen the strategic waterway as long as the US naval blockade persists.
Iranian authorities characterized the blockade as an “act of war.” Meanwhile, Trump indicated he would refrain from additional military operations until Iran presents a new diplomatic proposal.
Scheduled peace negotiations anticipated for Tuesday failed to materialize. US Vice President JD Vance scrapped a planned visit to Islamabad following Iran’s announcement that it would boycott the discussions.
Hawkish Fed Nominee Weighs on Gold Outlook
Gold faced additional headwinds from statements delivered by Kevin Warsh, Trump’s nominee to chair the Federal Reserve. During Tuesday’s testimony before the Senate Banking Committee, Warsh explicitly refused to promise interest rate reductions.
Warsh, who previously served as a Fed governor, emphasized the central bank’s autonomy from political influence. He indicated that if confirmed, a revised policy framework would be necessary to address ongoing inflationary pressures.
Financial markets view Warsh as having a hawkish monetary policy stance, suggesting he would favor maintaining elevated interest rates rather than implementing aggressive cuts. Elevated interest rates typically weigh on gold, as the precious metal generates no yield or dividends.
His nomination had previously triggered selloffs in gold and precious metals markets in late January. The timeline for his confirmation process remains unclear.
Senior Republican lawmakers have expressed opposition to confirming Warsh unless the Trump administration terminates its ongoing probe into current Fed Chair Jerome Powell. Powell is anticipated to continue serving beyond his term expiration on May 15 if confirmation proceedings are postponed.
Gold Remains Range-Bound Despite Volatility
Gold has shed roughly 10% since the Iran conflict commenced in late February. Over recent weeks, prices have oscillated within a relatively narrow band between approximately $4,700 and $4,900 per ounce.
Market analysts suggest that current geopolitical risks are largely incorporated into pricing. Either a significant escalation in hostilities or a substantial shift in economic fundamentals would be required to drive prices decisively beyond this range.
The US dollar weakened 0.3% on Wednesday, making dollar-denominated gold marginally more affordable for international buyers. Oil prices also retreated, with Brent crude hovering near the $100 per barrel mark.
Gold’s price action since the conflict’s onset has tracked risk assets such as equities more closely than conventional safe-haven instruments, reacting to each new development in the conflict.
Powell is projected to remain as Fed chair beyond May 15, particularly if Congressional deliberations on the Warsh confirmation extend.
