The extension of the Iran-Iraq ceasefire affects inflation expectations, and gold prices rebound after falling for two straight days

After experiencing two days of declines, the international gold price showed signs of stabilizing under the impact of the United States and Iran extending the ceasefire agreement. The current stalemate between the two sides in the Strait of Hormuz remains ongoing, and no timetable for a new round of peace talks has yet been agreed upon. The accompanying risks to energy supply have kept Brent crude oil prices above $100 per barrel, further intensifying global market inflation pressure. Spot gold is currently quoted at $4,733. The report notes that funds are gradually flowing back into gold ETFs, providing fundamental support for gold prices.

Geopolitical stalemate and energy-market shocks

The United States announced an indefinite extension of its ceasefire agreement with Iran, but the standoff between the two sides in the Strait of Hormuz remains severe. This conflict, now entering its eighth week, has put the global energy supply chain to the test, pushing Brent crude oil prices above the $100-per-barrel mark. With energy prices staying high, market expectations for inflation have been lifted. Central banks in various countries may therefore be more inclined to maintain or raise interest rates to counter inflation pressure. For gold, which has no yield, this creates a certain degree of macroeconomic headwind.

Positioning settling and fundamental support

Despite pressure from interest-rate policy, the gold price has gradually stabilized after the selloff. According to market analysis, the positioning in the current gold market has already been significantly absorbed. By the end of February, high-leverage speculative trading has been greatly reduced, and current price action is driven more by fundamentals. Improvements in the positioning structure reduce the risk of disorderly price volatility. Investment institutions have also pointed out that in this environment, the tactical allocation value of gold is emerging; some institutions have dynamically adjusted their gold weights to deal with potential market uncertainty.

ETF fund flows and upward price pressure

Gold ETF fund moves confirm a recovery in hedging demand. A BMO report shows that gold ETFs have recorded inflows for three consecutive weeks, driving spot gold prices to rise steadily since the selloff wave in March. However, upward price momentum has recently slowed. When gold prices approach the $4,850 level, the Asian market may see sell pressure from profit-taking. This also indicates that investors remain cautious. Amid complex geopolitical conditions, professional institutions are less willing to build large positions, and it is expected that the market will maintain a choppy, range-bound pattern.

This article, “The U.S.-Iran ceasefire extension stirs up inflation expectations; after two straight days of declines, gold prices rebound,” was first published on Lian News ABMedia.