Gold prices rose nearly 2% on Tuesday to about $4,835 per ounce, rebounding from an earlier low of $4,742, as a weaker U.S. dollar and softer oil prices overshadowed geopolitical tension in the Middle East.
The move came amid expectations of renewed diplomatic contacts between Washington and Tehran, even as U.S. forces detained vessels linked to Iran during the ongoing blockade in the Strait of Hormuz. By late Wednesday, gold was consolidating near $4,810 after failing to hold above $4,850 following fresh Federal Reserve comments.
Currency, oil moves support gold
The U.S. dollar index slipped 0.26% to 97.96 on Tuesday, its lowest level in six weeks. At the same time, West Texas Intermediate (WTI) crude dropped 6.4% to $91.72 per barrel, before recovering 1.8% in overnight trade on Wednesday to around $93.37 after confirmation of preliminary U.S.–Iran talks planned in Geneva next week.
The combination of a softer dollar and lower oil—both priced in U.S. currency—helped lift demand for gold as a perceived safe haven and alternative store of value.
Fed signals steady rates for longer
Traders also focused on a series of comments from Federal Reserve officials that pointed to a prolonged period of unchanged interest rates.
Chicago Fed President Goolsbee said rates may remain on hold through 2026, adding that any potential cuts would likely be pushed into 2027 if elevated energy prices keep inflation pressures intact.
Fed Governor Miran projected inflation moving closer to the central bank’s 2% target over the next year but warned that persistent strength in oil could delay any policy easing. On Thursday morning, Fed Governor Bowman echoed this stance, stating she sees “no compelling reason to consider rate adjustments” before the first quarter of 2027, citing ongoing wage growth as a key inflation concern.
Economic data send mixed signals
Recent U.S. data reinforced a cautious backdrop. On Tuesday:
- The producer price index (PPI) slowed to 4% year-on-year in March, below expectations of 4.6%.
- Core PPI remained steady at 3.8%.
- The ADP four-week employment average rose to 39,250 from 26,000, pointing to continued labor market resilience.
On Thursday, the Department of Labor reported initial jobless claims at 218,000 for the week ending April 11, above forecasts of 212,000, adding nuance to the strength of the labor market.
Money market pricing, according to Prime Market Terminal data, now largely reflects expectations that the Fed will keep its policy rate unchanged through the rest of the year. Traders are watching upcoming Fed speeches, the Beige Book release and Thursday’s jobless claims data for further guidance.
Dollar dynamics overpower geopolitics
The latest price action suggests gold’s inverse relationship with the U.S. dollar is currently exerting more influence on the metal than its traditional reaction to geopolitical risk, where rising tensions typically lend support.
With the dollar under pressure against hard assets, traders are reassessing which assets best serve as a store of value in an environment of potentially prolonged tight monetary policy but softening growth indicators.
Iran talks and oil price reaction
Late Wednesday, officials confirmed that U.S. and Iranian envoys are set to hold preliminary talks in Geneva next week. Tehran’s foreign ministry reiterated that sanctions relief remains a non-negotiable condition for any progress.
The announcement triggered a modest rebound in energy markets, with WTI crude futures gaining 1.8% to about $93.37 in overnight trade, partially reversing Tuesday’s sharp decline.
Technical outlook and volatility
From a technical standpoint, spot gold has broken above the $4,800 level and is eyeing resistance near $4,857, a price last seen on April 8. A sustained move above $4,900 could pave the way toward the $5,000 psychological level.
On the downside, any reversal may bring the 100-day and 20-day simple moving averages into focus, currently around $4,677 and $4,650, respectively. Market participants are also watching whether this week’s low at $4,742 can act as a durable floor.
Volatility has risen alongside price swings. The CBOE gold volatility index has increased by 3.2% over the past 24 hours to 18.6, reflecting heightened uncertainty as markets navigate conflicting signals from economic data and firm central bank rhetoric.
Outlook: more data, sharper swings
The combination of softening inflation data, still-solid labor readings and a Fed signaling no near-term rate cuts creates a challenging setting for risk assets. In this environment, gold has become increasingly sensitive to shifts in the dollar and incoming macro data.
With policy makers signaling higher-for-longer borrowing costs while growth signals cool at the margin, price movements across metals, currencies and energy could become more pronounced. Traders with exposure to liquidity-sensitive positions are likely to maintain a close watch on upcoming economic releases and Fed communications in the weeks ahead.
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