Gold spot was trading around $4,736 by mid-morning in London on Thursday, pulling back from the three-week highs touched on Wednesday when the metal briefly touched $4,857 on ceasefire euphoria. The rally has lost some steam overnight, and the mood is now one of cautious consolidation.
The trigger for Wednesday’s surge was a post on Truth Social from President Trump, who announced a two-week suspension of US military strikes on Iran, conditional on Tehran agreeing to a full reopening of the Strait of Hormuz. Iran’s Foreign Minister confirmed safe passage through the waterway would be possible for the two-week period, and first-round talks are scheduled for Friday in Islamabad.
For a market that has spent weeks grinding under the weight of energy-driven inflation fears, that was enough to spark a sharp relief rally – oil tumbled more than 10%, the dollar slid, and gold caught the updraught.
But the ceasefire enthusiasm began to cool almost as quickly as it arrived. Iranian officials warned overnight that continued Israeli operations in Lebanon could be considered a violation of the truce terms, and a source cited by Iran’s Tasnim News Agency suggested Tehran could walk away from the agreement if attacks persisted.
The FOMC minutes, released on Wednesday, did nothing to encourage gold bulls either. The Fed’s record of its March meeting confirmed that policymakers remain wary of cutting rates too soon, with officials citing persistent inflation pressures linked to elevated energy prices as a key concern.
While some members acknowledged softer patches in parts of the economy, the overall message was one of caution – rates are staying where they are until the data gives clearer cover. Markets are pricing in virtually no chance of a cut at the April meeting, and a three-quarters probability that the Fed holds for the rest of the year.
The metal has benefited from the ceasefire news via a weaker dollar and falling oil prices, which reduce near-term inflation fears and modestly dial back the case for further tightening. But the same ceasefire also strips away some of the geopolitical safe-haven premium that has been baked into the price since the Iran conflict escalated in late February. For now, investors are waiting to see whether the Islamabad talks produce anything durable.
Q4 GDP figures and the core PCE inflation reading for February are both due later today, and any upside surprise on inflation would quickly reinforce the higher-for-longer narrative.
Technical analysts are watching $4,738 as the level gold needs to close above to maintain its short-term constructive bias. Central bank demand continues to provide a floor, with China and several other emerging market buyers steadily accumulating, even as monthly purchase volumes remain below last year’s pace.