Gold Edges Up as Iran Ceasefire Extension Eases Nerves

Key Moments

Ceasefire Extension Lifts Gold From Recent Low

Gold (XAU/USD) is recovering on Wednesday, retracing part of the prior session’s decline after the announcement that US President Donald Trump has extended the ceasefire with Iran just hours before its scheduled expiration. At the time of writing, XAU/USD is quoted around $4,750, bouncing from a one-week trough of $4,668 set on Tuesday.

Trump Acts at Pakistan’s Request, Keeps Blockade Intact

The decision to prolong the ceasefire follows Iran’s refusal to engage in further discussions “under the shadow of threats” and its decision not to join the second round of peace talks that had been anticipated in Pakistan. According to Trump, the extension was granted at the request of Pakistan’s leadership to give Tehran additional time to assemble a unified negotiating proposal.

Despite the extension, the United States has maintained its naval blockade of Iranian ports. I have therefore directed our Military to continue the Blockade… and will extend the Ceasefire until such time as their proposal is submitted, and discussions are concluded, one way or the other, Trump stated in a Truth Social post.

The move has not delivered a clear path forward. Iran has yet to formally endorse the extended ceasefire, and with the blockade still in force, it remains uncertain whether Tehran will reengage in talks.

Gold Reacts to Geopolitics Amid Higher-for-Longer Rate Concerns

Although the ceasefire extension is not a comprehensive solution to the Middle East conflict, it has eased the most immediate market anxieties and supported a modest rebound in bullion. Since the US-Iran war began, Gold has traded more in line with risk-sensitive assets, with its price dynamics closely linked to fluctuations in the US Dollar (USD) and Oil.

However, the outlook for US monetary policy continues to cap the upside. Waning expectations for Federal Reserve (Fed) interest rate cuts, driven in part by inflation risks associated with elevated energy prices, are restraining a stronger move in Gold. The metal remains down nearly 10% from levels seen at the onset of the conflict.

Oil, Inflation Data and Fed Outlook

Oil prices remain high and have shown limited response to the ceasefire news, as supply through the Strait of Hormuz continues to face significant constraints. Recent US economic data underscore the inflationary pressure from energy costs: Retail Sales increased by 1.7% month-on-month in March after a 0.7% rise in February, while the Consumer Price Index (CPI) accelerated 0.9% month-on-month, up sharply from 0.3% previously.

This environment reinforces the view that the Fed may postpone rate cuts and keep borrowing conditions restrictive for an extended period. With the US economic calendar relatively light on Wednesday, market participants are looking primarily to geopolitical developments for trading cues.

Technical Picture: Gold Holds Above Key Averages

On the daily chart, XAU/USD is trading above the 100-day Simple Moving Average (SMA) at $4,731 and the 200-day SMA at $4,236, supporting the broader constructive trend. However, the pair remains capped below the 50-day SMA at $4,882, which is limiting near-term upside momentum.

The Relative Strength Index (RSI) stands at 48, close to neutral territory, while the Moving Average Convergence Divergence (MACD) indicator is in positive territory. Together, these signals point to balanced momentum following the latest pullback.

On the upside, a decisive move above the 50-day SMA near $4,882 would signal the potential for a more robust recovery. On the downside, initial support is seen at the 100-day SMA around $4,731, with stronger backing at the 200-day SMA near $4,237.