Gold prices rise following the extension of the ceasefire with Iran

Gold prices rose today, as the yellow metal increased in spot transactions by 0.9 percent to $4,755.11 per ounce by 02:25 GMT, after it fell yesterday, Tuesday, to the lowest level since April 13.

US gold futures for June delivery rose 1.1 percent to $4,772.90.

US President Donald Trump said he would extend the ceasefire with Iran indefinitely to allow for more peace talks, hours before the truce expired.

“With the extension of the ceasefire, the markets see a calming in the crisis,” said Edward Meir, an analyst at Marex.

He continued: “If the ceasefire ends and hostilities resume, we will see a rise in the dollar, oil prices, and interest rates, and this will put pressure on (gold) prices.”

Stocks rose, the dollar fell, and oil prices fell following the extension of the ceasefire. Rising crude oil prices can fuel inflation by raising transportation and production costs. While gold is considered a means to hedge against inflation, rising interest rates make yield-generating assets more attractive, which reduces demand for the yellow metal.

“Price movement remains dependent on ceasefire news in the Middle East and liquidity needs,” Standard Chartered said in a note.

He added, “While we note that the recent rise in prices was fragile and faces the risk of correction in the short term, we still expect (precious metals) prices to recover, and for gold in particular to once again test its record levels.”

Kevin Warsh, the candidate to head the Federal Reserve (the US central bank), said yesterday, Tuesday, that he did not make any promises to Trump about lowering interest rates, trying to reassure senators who are considering confirming his appointment as head of the central bank that he will make decisions independently of the White House.

As for other precious metals, silver rose in spot transactions 1.5 percent to $77.84 per ounce, platinum increased 1.5 percent to $2,067.25, and palladium rose 1.8 percent to $1,560.31.