Gold prices rose in European trading on Monday, resuming gains that stalled in the previous session and approaching a two-week high, supported by the current decline in the US dollar against a basket of global currencies.

Officials in Iran received a proposal from Pakistan involving a short-term ceasefire to engage in intensive negotiations with the United States to reach a final agreement to end the war and military escalation in the Middle East.

Price Overview

Gold prices today: gold rose 0.65% to $4,704.84, up from the session opening level of $4,676.49, after hitting a low of $4,600.92.

At Thursday’s settlement, gold prices lost 1.7%, marking the first loss in five days due to corrections and profit-taking after earlier reaching a two-week high of $4,800.38 per ounce.

The precious metal gained 4.1% last week, marking its second consecutive weekly gain, driven by active investment demand taking advantage of lower price levels.

US dollar

The dollar index fell 0.4% on Monday, on track for its first loss in three sessions, reflecting a decline in the US currency against a basket of major and minor currencies.

As is widely known, a decline in the US dollar makes gold, which is priced in dollars, more attractive to buyers holding other currencies.

In addition to renewed profit-taking, the US dollar is declining amid growing hopes for an end to the Iran war, especially as Iran studies the Pakistani proposal to halt the military escalation.

Iran war updates

• Senior Iranian official: Tehran has received the Pakistani proposal and it is currently being reviewed.

• Iranian Foreign Ministry spokesperson: Tehran has prepared its diplomatic response to the United States and will announce it at the appropriate time.

• Trump vows that Iran will face "hell" by Tuesday if the deadline to open the Strait of Hormuz is not met.

• Axios: Iranian mediators are making last-ditch efforts to reach a 45-day ceasefire.

• Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.

US interest rates

According to the CME FedWatch tool from CME Group, the probability that US interest rates will remain unchanged at the upcoming April meeting is currently priced at 99%, while the probability of a 25-basis-point rate hike stands at 1%.

Traders have almost entirely ruled out any possibility of a Federal Reserve rate cut this year. Before the outbreak of the Iran war, expectations pointed to two cuts this year.

To reassess these probabilities, investors are awaiting the release of several important US economic data points throughout this week regarding growth and inflation levels in the world's largest economy.

Gold outlook

Tim Waterer, chief market analyst at KCM Trade, said the latest strong non-farm payrolls data has reinforced hawkish central bank fears, while concerns over inflation driven by oil prices continue to overshadow gold's traditional safe-haven appeal.

SPDR fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged on Thursday, leaving the total at 10,502.99 metric tons.

The euro fell in European trading on Monday against a basket of global currencies, continuing its losses for the third consecutive day against the US dollar. This decline comes as investors focus on buying the US currency as a preferred safe-haven asset amid escalating fears of the Iran war intensifying, as they await the final deadline set by US President Donald Trump to reopen the Strait of Hormuz.

With eurozone inflation exceeding the European Central Bank's medium-term target due to high energy prices, the probability of at least one European interest rate hike this year has increased, pending the release of further crucial economic data in Europe.

Price Overview

Euro exchange rate today: the euro fell about 0.1% against the dollar to $1.1505 from the session opening level of $1.1514, after reaching a high of $1.1525.

The euro ended Friday’s session down more than 0.2% against the dollar, marking its second consecutive daily loss due to developments in the Iran war.

US dollar

The dollar index rose more than 0.1% on Monday, maintaining gains for the third consecutive session and reflecting the continued strength of the US currency against a basket of global currencies.

The rally is driven by investors focusing on the US dollar as a preferred safe-haven asset amid rising fears of the Iran war escalating, especially following the recent threats from US President Donald Trump.

Strong labor market data released in the United States on Friday reduced the likelihood of the Federal Reserve cutting interest rates in the near term, as markets await further crucial economic data on inflation and consumer spending levels.

Iran war updates

• Trump vows that Iran will face "hell" by Tuesday if the deadline to open the Strait of Hormuz is not met.

• Axios: Iranian mediators are making last-ditch efforts to reach a 45-day ceasefire.

• Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.

European interest rates

ECB President Christine Lagarde said the bank is prepared to raise interest rates even if the expected rise in inflation is short-term.

Data released last week showed that eurozone inflation exceeded the European Central Bank's target, reaching 2.5% in March as energy prices rose.

Following this data, money market pricing for the probability of the European Central Bank raising interest rates by 25 basis points in April increased from 30% to 35%.

Sources told Reuters that the European Central Bank is likely to begin discussing interest rate hikes during this month's meeting.

To reassess these probabilities, investors are awaiting the release of more economic data from the eurozone regarding inflation, unemployment, and wages.

The Japanese yen fell in Asian trading on Monday against a basket of major and minor currencies, resuming its losses against the US dollar and approaching the ¥160 threshold. This decline comes as investors focus on buying the US dollar as a preferred safe-haven asset amid escalating fears of the Iran war intensifying, as markets await the final deadline set by US President Donald Trump to reopen the Strait of Hormuz.

With inflationary pressures easing for policymakers at the Bank of Japan, the probability of a Japanese interest rate hike in April has declined, as investors wait for further economic data from Japan.

Price Overview

Japanese yen exchange rate today: the US dollar rose 0.2% against the yen to ¥159.83 from Friday’s closing price of ¥159.51, after hitting a session low of ¥159.47.

The yen ended Friday’s session up less than 0.1% against the dollar, marking its first gain in three days amid fresh warnings from the Japanese Finance Minister regarding excessive currency movements in the foreign exchange market.

Supported by continuous warnings from Japanese monetary authorities, the yen gained 0.45% against the dollar last week, marking its second weekly gain in three weeks.

US dollar

The dollar index rose more than 0.1% on Monday, maintaining gains for the third consecutive session and reflecting the continued strength of the US currency against a basket of global currencies.

The rally is driven by investors focusing on the US dollar as a preferred safe-haven asset amid rising fears of the Iran war escalating, especially following the recent threats from US President Donald Trump.

Iran war updates

• Trump vows that Iran will face "hell" by Tuesday if the deadline to open the Strait of Hormuz is not met.

• Axios: Iranian mediators are making last-ditch efforts to reach a 45-day ceasefire.

• Axios: Sources report that the chances of reaching a partial agreement within the next 48 hours are slim.

Japanese authorities

Japanese Finance Minister Satsuki Katayama issued a new warning to currency traders on Friday, confirming the government's readiness to act against speculation in the foreign exchange markets given the significant rise in volatility recently.

Katayama said during a regular press conference that there is a rise in speculation in both the crude oil futures and foreign exchange markets, and that volatility has increased significantly.

Katayama added that since exchange rate fluctuations resulting from these developments affect the livelihoods and economy of citizens, the government is fully prepared for a comprehensive response on all levels.

Japanese interest rates

Data released last week in Japan showed a slowdown in Tokyo core inflation during March, the latest indicator of easing inflationary pressures on Bank of Japan policymakers.

Following this data, the market pricing for the probability of the Bank of Japan raising interest rates by a quarter point at the April meeting fell from 25% to 15%.

To reassess these probabilities, investors are awaiting the release of more data on inflation, unemployment, and wages in Japan.

Oil markets are bracing for the possibility of a historic price surge, with prices potentially rising to between $150 and $200 per barrel if the Strait of Hormuz remains partially closed through mid-May, according to warnings from JPMorgan and other institutions.

During Thursday’s trading, US West Texas Intermediate crude jumped above Brent to settle at $112 per barrel, while Brent crude ended the week near $109 per barrel.

Sharp decline in shipping activity

Shipping traffic through the Strait of Hormuz has dropped sharply since early March, with Iran currently allowing only a limited number of vessels to pass.

Even if full transit resumes immediately, it could take three to six months for production and refining supply chains to return to normal.

In an effort to reopen the strait, the United Kingdom hosted a virtual meeting this week involving more than 30 countries aimed at ensuring safe passage and preventing Iran from imposing transit fees.

So far, however, there are no clear signs of a reopening.

The $200 scenario

Energy consultancy FGE NexantECA warned that prices could surge to $200 per barrel if the strait remains largely closed for another six weeks. Another forecast suggested prices could reach a record $200 if the Gulf conflict continues through June.

Analysts had already warned shortly after the US, Israeli, and Iranian attacks began on February 28 that the war could push oil above $100 per barrel.

On March 9, Brent — the global oil benchmark — approached $120 per barrel and has not fallen below $100 since March 13.

An Israeli strike on Iran’s South Pars gas field on March 18, followed by Iranian attacks on oil and gas facilities in Qatar, Saudi Arabia, and the UAE, pushed prices higher again, above $108 per barrel.

A fifth of global oil passes through the strait

Most analysts agree that prices could climb further if the Strait of Hormuz — which carries about one-fifth of global oil supply in peacetime — remains effectively closed in the coming weeks.

The main disagreement lies in the scale of the potential increase.

Vandana Hari, founder of Vanda Insights, said some Middle Eastern crude grades such as Oman and Dubai have already surpassed $150, putting $200 within reach, even if Brent or WTI have not yet reached that level.

She added that the extent of the price surge will depend almost entirely on how long the strait remains closed.

Near-total halt in shipping

After Iran announced the closure of the strait at the start of the conflict and threatened to target any vessels attempting to pass, shipping traffic has nearly come to a halt.

US President Donald Trump has so far failed to rally international support for a naval convoy to reopen the strait, while several countries are seeking bilateral arrangements with Iran to secure safe passage for their vessels.

In recent days, only a limited number of ships have been allowed through, most flying the flags of India, Pakistan, Turkey, and China.

Global supply shortfall

Despite commitments to release 400 million barrels from emergency oil reserves in coordination with the International Energy Agency, these volumes are insufficient to fully offset the disruption in shipments through the strait.

A research unit at Singapore’s OCBC Group estimates the global market is facing a daily shortfall of around 10 million barrels, even with the use of reserves.

Less than three weeks into the conflict, market participants are increasingly taking seriously the possibility of prices exceeding $150 and potentially reaching $200 per barrel.

Fereidun Fesharaki, chairman emeritus of FGE NexantECA, said prices could rise to $200 or higher if the strait remains largely closed.

He added that while markets are partly driven by sentiment and Trump’s social media comments, the reality is that around 100 million barrels of oil are not passing through the strait each week — equivalent to 400 million barrels per month.

He warned that these losses would become increasingly significant over time.

A “world without Hormuz” scenario

The firm also expects the International Energy Agency may need to release additional strategic reserves by mid-April and possibly again in June.

It added that a “world without the Strait of Hormuz” is becoming a realistic scenario that could last for months, potentially forcing structural changes in energy markets, supply chains, and global trade.

Fesharaki warned that such a scenario could trigger a global economic shock, with a severe recession lasting for years.

Warnings from other institutions

FGE NexantECA is not alone in warning about $200 oil.

Analysts at Macquarie Group said prices could reach a record $200 per barrel if the Middle East conflict persists throughout the second quarter.

Wood Mackenzie analysts also suggested Brent could soon hit $150, with $200 “not out of the question” by 2026.

Iran itself has hinted at such levels, with a military spokesperson warning last week that the world should “prepare” for prices reaching $200.

Severe global economic consequences

Experts warn that oil prices at $150 or higher would place a heavy burden on the global economy.

The International Monetary Fund estimates that a sustained 10% increase in oil prices raises global inflation by about 0.4% and reduces economic growth by around 0.15%.

Brent’s historical peak was $147.50 per barrel during the 2008 financial crisis — equivalent to roughly $224 in today’s dollars.

Energy expert Adi Imsirovic of the University of Oxford said $200 oil would act as a “strong brake” on the global economy, noting that such a scenario is entirely plausible.

He added that it would impact inflation, growth, and employment, and could also lead to shortages in fuel and materials such as fertilizers and plastics.

More moderate views

Some analysts, however, see the $200 scenario as overstated.

Sasha Voss, an energy markets analyst at Marex in London, noted that increased production from countries such as the United States, Canada, Argentina, Brazil, and Guyana — along with alternative supply routes like Saudi Arabia’s East-West pipeline — could help ease pressure.

She added that the experience following the Russia-Ukraine war showed that higher prices tend to trigger increased production elsewhere.

The role of demand destruction

While price direction will largely depend on shipping flows through the Strait of Hormuz, broader supply-demand dynamics will also play a role.

At sufficiently high price levels, consumers begin to reduce consumption — a phenomenon known as demand destruction.

Although oil demand is less elastic than most commodities due to limited substitutes, prices may begin to retreat after surpassing certain thresholds.

Bob McNally, president of Rapidan Energy Group, said no one knows the exact level at which this effect kicks in, but it could be above the previous peak of $147 per barrel.

Economist Gregor Semieniuk of the University of Massachusetts Amherst added that price outcomes will depend on how quickly two opposing forces interact: buyers willing to pay any price for reduced volumes versus those exiting the market as prices rise and demand weakens.