Key Highlights
- Precious metal gained more than 1%, reaching approximately $4,767 per ounce following a two-session pullback
- US President extended ceasefire with Iran without time limit, creating additional space for diplomatic efforts
- Scheduled diplomatic talks between Washington and Tehran collapsed unexpectedly on Tuesday
- Federal Reserve Chair nominee Kevin Warsh confirmed he would not commit to rate reductions
- Precious metal has declined approximately 10% since Middle East tensions escalated in late February
Precious metal markets staged a recovery Wednesday following two consecutive days of declines, advancing more than 1% to approximately $4,767 per ounce. The upward movement followed US President Donald Trump’s announcement extending the ceasefire agreement with Iran, providing additional time for diplomatic resolution.
Spot gold increased 0.9% to reach $4,763.66, while futures contracts advanced 1.3% to settle at $4,782.21 per ounce. Silver surged 2.4% to $78.53 per ounce, accompanied by gains in platinum and palladium markets.
However, Middle East tensions continue to simmer beneath the surface. The strategic Strait of Hormuz remains closed to commercial maritime traffic. Iranian officials have stated they will not reopen the crucial waterway as long as Washington maintains its naval blockade in the region.
Tehran characterized the blockade as an “act of war.” Meanwhile, Trump indicated he would postpone additional military operations while awaiting a fresh proposal from Iran.
Expected diplomatic discussions scheduled for Tuesday failed to materialize. US Vice President JD Vance abandoned plans to travel to Islamabad after Iranian officials announced they would not participate in the scheduled negotiations.
Hawkish Fed Nominee Creates Additional Headwinds
Gold faced additional downward pressure following remarks from Kevin Warsh, Trump’s nominee for Federal Reserve leadership. During Senate Banking Committee testimony Tuesday, Warsh explicitly stated he would not guarantee interest rate cuts.
The former Fed governor emphasized the importance of central bank independence from political influence. He also indicated that a revised policy framework would be necessary to address ongoing inflationary pressures should he receive confirmation.
Financial markets interpret Warsh as a hawkish selection, suggesting he would favor maintaining elevated rates rather than implementing aggressive cuts. Elevated interest rates typically weigh on gold, as the metal generates neither interest income nor dividends.
His nomination had previously triggered selloffs in gold and precious metals markets in late January. The timeline for his confirmation hearing remains unclear at this stage.
Senior Republican leadership has resisted confirming Warsh unless the Trump administration abandons its current investigation into sitting Fed Chair Jerome Powell. Powell is anticipated to continue serving beyond his term expiration on May 15 should the confirmation process face delays.
Precious Metal Remains Range-Bound
Gold has retreated approximately 10% since Middle East hostilities commenced in late February. Throughout recent weeks, pricing has remained confined within a range of roughly $4,700 to $4,900 per ounce.
Market analysts suggest current pricing already reflects the existing level of geopolitical uncertainty. A significant escalation in conflict or substantial change in economic fundamentals would be required to drive prices decisively beyond this range.
The US dollar weakened 0.3% Wednesday, making dollar-denominated gold marginally more affordable for international buyers holding alternative currencies. Crude oil prices also declined, with Brent benchmark trading near the $100 per barrel level.
Since conflict erupted, gold’s price action has tracked risk-sensitive assets like equities rather than exhibiting traditional safe-haven characteristics, responding to each new development in the military situation.
Powell is anticipated to continue as Fed chair beyond the May 15 deadline, particularly if Congressional action on the Warsh confirmation faces delays.
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