Gold Prices Firm Amid Global Market Uncertainty as US-Iran Ceasefire Extended

Gold and Silver Prices Rebound as US-Iran Ceasefire Extended

Gold and silver prices rose on Wednesday, April 22, breaking a two-day losing streak, after Donald Trump extended the ceasefire with Iran. Despite hopes for a fresh round of peace talks collapsing, the COMEX gold rate surged nearly 1% to $4,768 per ounce, while the COMEX silver rate retreated 1.8% to $77.80 per ounce during the Asian trading hours.

The gold market has been volatile in recent weeks, with prices falling by more than 10% since the start of the US-Iran war. However, gold has been moving within a relatively narrow range in recent weeks. In contrast, silver has declined more sharply, dropping nearly 17% over the same period.

The extension of the ceasefire has led to a rebound in gold and silver prices, despite the Strait of Hormuz remaining shut to shipping. Iran has stated that it will not reopen the crucial route as long as the US continues its blockade on vessels linked to the Islamic Republic. Oil prices held on to their gains on Wednesday, while the US dollar index rose 0.4% in the previous session, weighing on gold, which is priced in dollars.

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The conflict has caused an unprecedented disruption to energy supplies, raising inflation concerns and increasing the likelihood that central banks will keep interest rates elevated or even hike them further. This is a negative factor for non-yielding assets like bullion. Bullions also came under pressure after Kevin Warsh pledged to act independently if confirmed as the next Federal Reserve chair, according to a Bloomberg report.

Market participants believe that Warsh will adopt a cautious approach to reducing borrowing costs, rather than implementing the sharper rate cuts advocated by Trump. According to Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, gold has remained largely range-bound, as market participants stayed on the sidelines awaiting clarity on US-Iran talks.

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Renisha Chainani, Head - Research at Augmont, believes that gold and silver prices are consolidating as investors assess the possibility of US-Iran diplomatic talks and the uncertain future of the current ceasefire. The technical outlook of the gold prices suggests that a breakout or breakdown from the range of $4750 and $4850 will give a 3-4% directional move. Similarly, a breakout or breakdown from the range of $78 and $81 will give a 3-4% price swing in the silver market.