Gold prices fell in the European market on Thursday, resuming the losses that briefly paused yesterday. The metal traded below the $4,700 per ounce threshold, pressured by the rise of the U.S. dollar and oil prices amid escalating tensions between the United States and Iran in the Strait of Hormuz, despite the extension of the ceasefire agreement.

Although gasoline prices in the United States are rising and inflationary pressures are mounting on Federal Reserve policymakers, the probability of a U.S. interest rate hike this April remains very low.

Price Overview

- Gold Prices Today: Gold prices fell by 1.0% to ($4,692.68), from an opening level of ($4,739.32), while recording a high of ($4,753.79).

- At the close of trading on Wednesday, gold prices achieved a gain of more than 0.4%, marking their first increase in three days as part of a recovery from a one-week low of $4,668.74 per ounce.

The U.S. Dollar

The dollar index rose by more than 0.1% on Thursday, extending its gains for the third consecutive session and reaching its highest level in over a week. This reflects the continued ascent of the American currency against a basket of global currencies.

This rise comes as investors focus on buying the U.S. dollar as a safe haven, as the United States and Iran remain at odds over the ceasefire, the blockade, nuclear files, and control of the Strait.

These disputes keep the strategic waterway effectively closed and threaten an energy sector shock that could harm global economies.

Analysis and Insights

Skye Masters, head of markets research at National Australia Bank, stated: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Masters added that extreme economic and trade risks are currently undervalued, and inflationary pressures are expected to persist until the end of the year.

Iranian War Updates

- The United States intercepted three Iranian oil tankers in Asian waters.

- Iran seized two cargo ships in the Strait of Hormuz on Wednesday.

- Maritime traffic in the Strait of Hormuz is nearly at a standstill.

- The United Kingdom announced that two vessels were attacked in the Strait of Hormuz.

- Trump hinted at the possibility of a second round of negotiations in Pakistan tomorrow, Friday.

- Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf stated that a full ceasefire only makes sense if the blockade is lifted.

Global Oil Prices

Global oil prices rose by more than 4% on Thursday, extending gains for the fourth consecutive day and reaching a two-week high. This follows mounting fears of energy supply disruptions from the Arabian Gulf region as the Strait of Hormuz remains closed to oil tankers.

The rise in global oil prices renews fears of accelerating inflation, which could push global central banks to raise interest rates in the near term—a sharp pivot from pre-war expectations of rate cuts or long-term holds.

U.S. Interest Rates

- Kevin Warsh, the nominee for a senior Federal Reserve role, 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%.

- Investors are closely monitoring the release of further economic data from the United States to re-price these probabilities.

Gold Performance Expectations

Tim Waterer, chief market analyst at KCM Trade, said: "The return of Brent crude prices to high levels keeps inflation fears at the forefront of attention and weakens gold's position today."

Waterer added: "Investors fear that the current 'ceasefire with a continued blockade' status quo could last for months, turning a short-term sharp rise into a long-term inflationary burden, which would negatively impact gold yields."

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, decreased by approximately 8.85 metric tons on Wednesday. The total fell to 1,050.91 metric tons, its lowest level since April 14.

The Euro declined in the European market on Thursday against a basket of global currencies, deepening its losses for the third consecutive day against the U.S. dollar. It reached its lowest level in ten days as investors focused on purchasing the American currency as the preferred alternative investment amid escalating tensions between the United States and Iran in the Strait of Hormuz, with both sides exchanging control over ships and oil tankers.

The current rise in global oil prices increases indications of growing inflationary pressures on monetary policymakers at the European Central Bank (ECB) and boosts the probability of European interest rate hikes this year. To re-price these probabilities, traders await the release of key European sector data for April later today.

Price Overview

- Euro Exchange Rate Today: The Euro fell against the dollar by more than 0.1% to ($1.1692), the lowest since April 13, from today’s opening price of ($1.1705), while reaching a high of ($1.1714).

- The Euro ended Wednesday's trading down 0.3% against the dollar, its second consecutive daily loss, due to escalating geopolitical tensions in the Middle East.

The U.S. Dollar

The dollar index rose by more than 0.1% on Thursday, extending its gains for the third consecutive session and recording its highest level in over a week. This reflects the continued rise of the American currency against a basket of global currencies.

This ascent comes as investors focus on buying the U.S. dollar as a safe haven, as the United States and Iran remain at odds over the ceasefire, the blockade, nuclear files, and control of the Strait.

These disputes keep the strategic waterway effectively closed and threaten an energy sector shock that could damage global economies.

Skye Masters, head of markets research at National Australia Bank, stated: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Masters added that extreme economic and trade risks are undervalued, and inflationary pressures will persist until the end of the year.

Iranian War Updates

- The United States intercepts three Iranian oil tankers in Asian waters.

- Iran seizes two cargo ships in the Strait of Hormuz on Wednesday.

- Navigation in the Strait of Hormuz is nearly at a standstill.

- The United Kingdom announced that two vessels were attacked in the Strait of Hormuz.

- Trump hints at the possibility of a second round of negotiations in Pakistan tomorrow, Friday.

- Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf stated that a full ceasefire would only be logical if the blockade is lifted.

Global Oil Prices

Global oil prices rose by more than 4% on Thursday, extending gains for the fourth consecutive day and reaching a two-week high. This comes amid mounting fears of energy supply disruptions from the Arabian Gulf region as the Strait of Hormuz remains closed to oil tankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

European Interest Rates

- With the rise in global oil prices, money market pricing for the probability of the ECB raising European interest rates by 25 basis points in April increased from 20% to 30%.

- To re-price these probabilities, investors await the release of key sector data for the European economy later today.

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

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

The Japanese yen declined in the Asian market on Thursday against a basket of major and minor currencies, deepening its losses for the fourth consecutive day against the U.S. dollar. It reached its lowest level in nearly two weeks as investors focused on buying the American currency as the preferred alternative investment amid escalating tensions between the United States and Iran in the Strait of Hormuz, where both sides have exchanged control over ships and oil tankers.

Despite the current rise in global oil prices, the probability of the Bank of Japan (BoJ) raising interest rates during its April meeting remains weak. Most speculation suggests the bank will abandon its hawkish stance due to risks associated with the repercussions of the Iranian war.

Price Overview

- Japanese Yen Exchange Rate Today: The dollar rose against the yen by 0.15% to (159.68¥), the highest since April 13, from today’s opening price of (159.44¥), and recorded a low of (159.30¥).

- The yen ended Wednesday's trading down by 0.1% against the dollar, its third consecutive daily loss, due to escalating tensions between the United States and Iran.

The U.S. Dollar

The dollar index rose by more than 0.1% on Thursday, extending its gains for the third consecutive session and reaching its highest level in over a week. This reflects the continued rise of the American currency against a basket of global currencies.

This ascent comes as investors focus on buying the U.S. dollar as a safe haven, as the United States and Iran remain at odds over the ceasefire, the blockade, nuclear files, and control of the Strait.

These disputes keep the strategic waterway effectively closed and threaten an energy sector shock that could damage global economies.

Skye Masters, head of markets research at National Australia Bank, stated: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Masters added that extreme economic and trade risks are undervalued, and inflationary pressures will persist until the end of the year.

Iranian War Updates

- The United States intercepts three Iranian oil tankers in Asian waters.

- Iran seizes two cargo ships in the Strait of Hormuz on Wednesday.

- Navigation in the Strait of Hormuz is nearly at a standstill.

- The United Kingdom announced that two vessels were attacked in the Strait of Hormuz.

- Trump hints at the possibility of a second round of negotiations in Pakistan tomorrow, Friday.

- Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf stated that a full ceasefire would only be logical if the blockade is lifted.

Global Oil Prices

Global oil prices rose by more than 4% on Thursday, extending gains for the fourth consecutive day and reaching a two-week high. This comes amid mounting fears of energy supply disruptions from the Arabian Gulf region as the Strait of Hormuz remains closed to oil tankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

Japanese Interest Rates

- The Bank of Japan is expected to abandon its hawkish stance during its meeting next week, despite keeping interest rates steady.

- Governor Kazuo Ueda has recently refrained from pledging to raise interest rates in April, given the war's impact on economic projections.

- Market pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point in April is currently stable around 10%.

- To re-price these probabilities, investors await further data on inflation, unemployment, and wages in Japan.

The Canadian dollar stabilized near a six-week high against its U.S. counterpart on Wednesday, supported by rising oil prices, while investors await signs of diplomatic progress toward ending the war in the Middle East.

The Canadian currency, known as the "loonie," was traded largely unchanged at the 1.3660 level against the U.S. dollar, or the equivalent of 73.21 U.S. cents. On Tuesday, it had recorded its strongest intraday level since March 13 at 1.3629.

Analysts at Monex Europe indicated that recent market movements reflect investors focusing more on global risk appetite rather than domestic economic factors.

This came amid escalating tensions after Iran seized two ships in the Strait of Hormuz, strengthening its control over this vital maritime corridor, following President Donald Trump’s suspension of attacks without signs of resuming peace talks.

Analysts explained that if the ceasefire extension continues and oil prices stabilize, the Canadian dollar could see a recovery toward its recent highs; however, they expected trading to remain volatile in the absence of tangible diplomatic progress.

Conversely, the U.S. dollar, which serves as a safe haven, rose against a basket of major currencies, while oil prices climbed by approximately 4.2% to reach $93.42 per barrel.

Oil is one of Canada's most significant exports, but these exports have faced pressure over the past year due to high U.S. tariffs on key sectors such as automotive, steel, and aluminum. The United States-Mexico-Canada Agreement (USMCA) is scheduled for review by July 1.

In this context, Canadian Prime Minister Mark Carney emphasized that his country will not allow the United States to dictate terms during the agreement review.

Regarding domestic data, figures showed that new home prices declined by 0.2% in March compared to February, while investors await the release of February retail sales data on Friday, with expectations of a 0.9% month-on-month increase.

Canadian government bond yields were mixed across various maturities, with the 10-year bond yield falling by less than one basis point to reach 3.478%.