Gold prices are attempting to find a bottom after a period of intense fluctuation. As of Monday afternoon in Singapore, prices pared earlier losses, trading near $4,630 per ounce. This movement occurred following an Axios report indicating that the US, Iran, and regional mediators are discussing terms for a potential 45-day ceasefire agreement, a development that could ease immediate geopolitical risks. Nevertheless, statements from Donald Trump remained mixed; while referencing a deadline related to reopening the Strait of Hormuz, he also issued new threats against Iran, leaving investors to weigh hopes for de-escalation against the risk of further instability.
The broader macroeconomic backdrop remains unfavorable for gold. Since the conflict escalated in late February, prices have fallen approximately 12%, as rising energy costs have pushed up inflation expectations. Concurrently, robust U.S. labor market data, including March non-farm payrolls reaching their highest level since late 2024, has reinforced the Federal Reserve's focus on inflation risks rather than near-term interest rate cuts. This combination may have diminished gold's traditional appeal, particularly as rising interest rates typically pressure non-yielding assets, while some investors appear to be liquidating positions to cover losses elsewhere.
Positioning across markets appears cautious. Commentary from a former JPMorgan trader suggests investors are "taking chips off the table" to protect portfolios during a period of high volatility. Although technical signals indicate the recent sell-off may be stabilizing, the outlook remains uncertain given upcoming U.S. inflation data this week and persistently climbing oil prices. The next directional move for gold will likely depend on whether ceasefire talks translate into tangible progress or if inflation pressures and policy expectations continue to dominate investor sentiment.
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