Gold price halts two-day decline with US-Iran ceasefire extended

Gold prices steadied on Wednesday to snap a two-day decline, as an extension to the US-Iran ceasefire rekindled some optimism over peace talks and the overall market direction.

Spot gold advanced as much as 1.1% before paring most of those gains. The yellow metal has since settled above $4,700 an ounce, still near its lowest in a week.

The rise followed US President Donald Trump’s announcement of an extended ceasefire with Iran, easing investor worries of further escalation in the Middle East conflict.

Since the war began nearly two months ago, bullion has declined over 10% amid worries of global inflation caused by the supply disruptions in the Gulf region. While the metal traditionally serves as a hedge during times of uncertainty, it loses appeal when interest rates are high, which central banks are in favour of when there is inflationary pressure.

Fundamental-driven recovery

However, gold began to recover with the broader market in recent weeks as talks to end the war began. With no resolution to date, some see the metal as a potential value investment, especially with the S&P and NASDAQ reaching new highs on the latest ceasefire extension.

The current positioning in gold is significantly cleaner than before, said Darwei Kung, head of commodities and portfolio manager at DWS Group, in a note to Bloomberg.

“Up until the end of February, there was a substantial amount of speculative activity in gold, including highly leveraged trades,” Kung said.

The market now appears to be driven more by fundamentals, which is why “we like gold at this point,” said Kung, adding that he increased his gold positioning after the initial selloff in the early days of the war and is now overweight gold in his portfolio.

Gold ETF inflows, according to BMO analysis, “have shown a consistent recovery over the last three weeks,” which allowed prices to continue their steady ascent since March, when gold recorded its worst monthly performance since 2008.

Momentum slows

Gold is seeing “a bit of ​a reprieve as rates along the curve dropped here and on the hope that ​the Strait of Hormuz business gets worked out after Donald Trump’s statements,” Bart Melek, global head of commodity strategy at TD Securities, told Reuters, though he added that the situation remains “tenuous and uncertain.”

BMO noted that the upward price momentum has slowed over the last week, with signs that Asia may be selling once prices hit around the $4,850 mark.

For the year, gold remains up by 8.5%, continuing on a 60% rise from 2025.