Gold moves higher after Iran truce extension

Gold prices rose in the European market on Wednesday, moving up from a one-week low supported by the current slowdown in the American currency. This comes after U.S. President Donald Trump announced an indefinite extension of the ceasefire with Iran.

Statements by Federal Reserve nominee Kevin Warsh during a Senate hearing were interpreted as leaning toward a hawkish stance; however, markets are still waiting for more evidence regarding the path of U.S. interest rates.

Price Overview

- Gold Prices Today: Gold metal prices rose by 1.1% to ($4,772.41), from an opening level of ($4,719.37), and recorded a low of ($4,715.69).

- Upon price settlement on Tuesday, gold prices lost about 2.2% in their second consecutive daily loss, reaching a one-week low of 4,668.74 dollars per ounce due to Iran's refusal to participate in the peace negotiations scheduled in Pakistan.

The U.S. Dollar

The dollar index fell on Wednesday by 0.2%, retreating from a high of 98.57 points, reflecting a slowdown in the American currency's levels against a basket of major and minor currencies.

Beyond correction and profit-taking, U.S. dollar levels are declining due to a slowdown in safe-haven buying as markets welcomed Trump's decision to extend the ceasefire with Iran.

Iranian War Updates

- U.S. President Donald Trump announced the extension of the ceasefire with Iran indefinitely.

- Pakistan, the mediator in the peace talks, requested the ceasefire extension.

- Trump: "We will extend the ceasefire until Iran presents its proposal and discussions conclude one way or another."

- Iranian state television announced that Tehran will not commit to the truce extension announced by Trump.

- Advisor to the Speaker of the Iranian Parliament: "Trump's extension of the ceasefire is an attempt to gain time for a surprise strike."

U.S. Interest Rates

- Kevin Warsh, the nominee for a senior position on the Federal Reserve Board, stated on Tuesday that he has made no promises to Trump regarding interest rate cuts.

- According to the CME Group's FedWatch tool: the probability of keeping U.S. interest rates unchanged at the April meeting is currently stable at 99%, while the probability of a 25-basis-point hike stands at 1%.

- To re-price these probabilities, investors are closely following the release of more economic data from the United States.

Gold Performance Expectations

Edward Meir, an analyst at Marex, said: "With this ceasefire extension, markets see a decrease in the intensity of the crisis in the Middle East."

Meir added: "If the ceasefire ends and hostilities resume, we will see an increase in the value of the dollar and a rise in oil prices and interest rates, which will negatively affect gold prices."

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained virtually unchanged on Tuesday, with the total staying at 1,059.76 metric tons.