Key Highlights
- Yellow metal advanced over 1% to approximately $4,767 per ounce following a two-session slide
- Trump announced an open-ended extension to the US-Iran ceasefire, providing additional time for diplomatic efforts
- Scheduled US-Iran diplomatic meetings collapsed unexpectedly on Tuesday
- Fed Chair nominee Kevin Warsh testified he would not commit to rate reductions
- Precious metal has declined approximately 10% since the Iran confrontation started in late February
Precious metal valuations bounced back on Wednesday following two consecutive sessions of declines, advancing more than 1% to approximately $4,767 per ounce. The upward movement followed US President Donald Trump’s decision to extend a ceasefire with Iran without a fixed endpoint, providing both nations additional time to pursue diplomatic solutions.
Spot gold increased 0.9% to $4,763.66, while futures contracts advanced 1.3% to $4,782.21 per ounce. Silver surged 2.4% to $78.53 per ounce, accompanied by gains in platinum and palladium.
The Middle East situation continues to show fragility despite the ceasefire prolongation. The Strait of Hormuz remains blocked to commercial vessels. Iranian officials have stated the waterway will stay closed as long as the US naval blockade persists.
Iranian representatives labeled the blockade an “act of war.” Trump indicated he would postpone additional military operations pending Iran’s submission of a fresh proposal.
Diplomatic discussions scheduled for Tuesday failed to materialize. US Vice President JD Vance abandoned plans to travel to Islamabad following Iran’s announcement that it would skip the negotiations.
Hawkish Fed Nominee Weighs on Bullion
Gold faced additional headwinds from remarks delivered by Kevin Warsh, Trump’s selection to head the Federal Reserve. Warsh appeared before the Senate Banking Committee on Tuesday and declined to promise rate cuts.
Warsh, who previously served as a Fed governor, emphasized the central bank’s need to remain free from political influence. He indicated a revised policy approach would be necessary to address ongoing inflation challenges if his confirmation proceeds.
Financial markets view Warsh as someone likely to maintain elevated rates for extended periods rather than implementing aggressive cuts. Elevated interest rates typically weaken gold’s appeal, given the metal generates no yield or dividend income.
His selection previously sparked declines across gold and other precious metals during late January. The timeline for his Senate confirmation process remains unclear.
Senior Republican figures have resisted moving forward with Warsh’s confirmation while the Trump administration continues investigating current Fed Chair Jerome Powell. Powell appears likely to continue serving beyond his scheduled May 15 term conclusion if confirmation proceedings experience delays.
Yellow Metal Remains Range-Bound
Gold has surrendered approximately 10% of its value since the Iran confrontation commenced in late February. Throughout recent weeks, valuations have oscillated within a band spanning roughly $4,700 to $4,900 per ounce.
Market observers indicate traders have already incorporated current geopolitical tensions into pricing. Either a significant intensification or substantial economic policy changes would be required to drive prices decisively beyond the established range.
The dollar weakened 0.3% on Wednesday, reducing the cost of dollar-denominated gold for international buyers holding alternative currencies. Crude oil also declined, with Brent trading near the $100 per barrel level.
Since the conflict’s inception, gold’s performance has tracked risk assets such as equities rather than exhibiting typical safe-haven characteristics, responding to individual war-related developments.
Powell looks set to continue leading the Fed beyond May 15, particularly if lawmakers extend the Warsh confirmation timeline.
