Gold prices saw a modest increase during the Asian trading session on April 14, following two consecutive days of decline. This uptick was fueled by renewed optimism that negotiations could end the US-Iran war, helping to ease inflation concerns. The price of gold hovered near $4,760 per ounce, recovering a portion of the 0.6% loss recorded over the previous two trading sessions. In the prior session, spot gold opened lower but pared losses after briefly falling below $4,700.
Although the United States has initiated a maritime blockade in the Strait of Hormuz, the US President indicated that Iranian officials have reached out to the US government, expressing a willingness to "reach an agreement." According to informed sources, the US and Iran are discussing a new round of face-to-face talks aimed at securing a longer-term ceasefire. Reports suggest that another meeting could take place as early as April 16.
On Monday, oil prices fell, dropping below $100 per barrel, while equity markets rebounded. The US dollar index declined by 0.2%, providing support for dollar-denominated gold. The retreat in energy prices alleviated some of the inflationary pressures that have weighed on gold since the outbreak of the war six weeks ago. This has led traders to anticipate that central banks may keep interest rates unchanged for longer, or even raise them—a development that typically poses a challenge for non-yielding commodities like gold. Despite recent gains, gold remains approximately 10% lower since the conflict began in late February. Early in the crisis, liquidity constraints prompted investors to sell gold to cover losses elsewhere.
Although gold rebounded from a lower opening in the previous session due to safe-haven demand, its upward momentum was capped by three major factors: a stronger US dollar, rising inflation, and fading expectations for interest rate cuts. Ultimately, prices failed to close in positive territory. Market pricing logic has shifted from a simple "geopolitical crisis → buy gold as a hedge" framework to one centered on "energy-driven inflation → expectations for policy tightening → pressure on non-interest-bearing assets."
Analysts note that gold trading continues to be influenced more by interest rate expectations than by geopolitical hedging. As a result, expectations for an easing of overnight tensions have allowed gold to benefit from the stock market rally. While inflation concerns pose short-term pressure on gold, a sustained rise in oil prices could eventually lead to slower economic growth—a scenario that has historically been supportive for gold.
Later today, the United States will release its March Producer Price Index (PPI) data, which will offer the first glimpse of how the early stages of the Iran war have influenced prices. Market forecasts anticipate a year-on-year increase of 4.6%, up from the previous reading of 3.4%. The key focus of the PPI release lies in its role as a leading indicator for the Consumer Price Index (CPI) and as the first stage through which energy price increases transmit to end consumers. Given the surge in oil prices triggered by Middle East tensions, the US may face additional inflationary pressures.
If the PPI exceeds expectations, concerns over persistent inflation could intensify, further delaying expectations for interest rate cuts and placing short-term downward pressure on gold. However, against the backdrop of ongoing geopolitical risks, safe-haven demand is likely to provide a floor, limiting the extent of any decline. Conversely, if inflation does not rise significantly, expectations for Federal Reserve rate cuts could rebound. Lower real interest rates would then likely drive gold prices higher.
Despite near-term headwinds from inflation and interest rate expectations, gold continues to be supported by multiple structural factors over the longer term. These include ongoing gold purchases by global central banks, weakening confidence in fiat currencies, and a reassessment of gold’s monetary role—particularly as a cross-border settlement asset when traditional payment systems face constraints. These elements collectively provide a solid foundation for gold prices. Macro perspectives also suggest that while short-term liquidity pressures persist, gold may have already priced in a significant portion of the war risk. A moderation in hostilities over the medium term could bring new dynamics into play.
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