Key Highlights
- Precious metal advanced more than 1% following Iran’s declaration that the Strait of Hormuz is accessible to commercial shipping during the truce period
- President Trump revealed a 10-day pause in hostilities between Israel and Lebanon, indicating Washington and Tehran are nearing a comprehensive agreement
- Crude oil experienced a significant decline, with Brent contracts plummeting 8.3% following the Iranian foreign minister’s statement
- Bullion is poised for a fourth consecutive weekly advance, though prices remain approximately 9% beneath pre-conflict highs
- Speculative traders have reduced their bullish gold positions to the weakest level in more than 24 months
Bullion prices climbed to $4,843.17 per troy ounce during Friday’s morning session, marking a 1.1% increase, following Iranian Foreign Minister Abbas Araghchi’s announcement via X that the Strait of Hormuz would remain accessible to all merchant vessels throughout the ceasefire duration.
The strategic waterway channels approximately 20% of global petroleum and natural gas supplies. The effective blockade since hostilities erupted in February’s final days triggered the most severe energy supply crisis on record and propelled crude prices substantially upward.
Brent crude contracts declined 8.3% in response to Araghchi’s declaration. American stock index futures amplified their advances following the development.
The US President unveiled a 10-day cessation of hostilities between Israel and Lebanon on Thursday. Israeli Prime Minister Benjamin Netanyahu validated the arrangement.
Trump indicated that Iran had accepted conditions regarding nuclear armaments it had previously rejected, noting that both nations are approaching a comprehensive settlement. He stated Tehran has committed to refrain from nuclear weapon possession for over two decades.
Tehran has demanded the lifting of global sanctions as compensation. Trump mentioned he would contemplate extending the pause if diplomatic discussions with Iran progress favorably.
Negotiations between Washington and Tehran could recommence as soon as the upcoming weekend, the President suggested. Certain European and Middle Eastern officials have projected that finalizing a complete accord might require up to half a year.
Implications of the Truce for Precious Metals
Gold has faced headwinds throughout most of the seven-week period since hostilities commenced. Elevated crude prices intensified inflation concerns, prompting market participants to anticipate central banks maintaining or increasing borrowing costs. The precious metal typically underperforms during periods of elevated interest rates.
The American currency also gained strength throughout the conflict, partially because substantial domestic energy shipments insulated the US economy from supply chain disruptions. A robust dollar increases bullion costs for international purchasers. The dollar gauge was tracking toward a 0.5% weekly decline on Friday.
The yellow metal has rebounded in recent trading sessions but remains approximately 9% lower since late February when the conflict ignited.
Federal Reserve Bank of New York President John Williams remarked Thursday that prevailing uncertainty complicates providing definitive rate guidance, though he continues to anticipate reductions over an extended timeframe.
Speculative Positioning Reaches Two-Year Minimum
Speculative traders reduced their net bullish gold positions to the weakest level in over 24 months during the week concluded April 7, based on recent regulatory filings.
Ole Hansen, Saxo Bank’s commodity strategy chief, noted that diminished positioning “minimizes the potential for additional long unwinding” while establishing capacity for renewed accumulation should market conditions remain favorable.
Gold futures contracts traded at $4,865.09 per troy ounce during Friday’s New York morning session, registering a 1.2% daily gain. Silver advanced 0.7% to reach $78.96 per ounce.
