Gold Trading Reminder: Soaring and Then Plunging! US-Iran Ceasefire Triggers Rollercoaster in Gold Market, Hidden Dangers Loom Behind

　　

On Wednesday (April 8), after the US and Iran reached a two-week ceasefire agreement, soared by more than 3% at one point, reaching as high as $4,856.93/oz; the ceasefire news drove oil prices below $100 per barrel, fell, significantly alleviating inflation concerns and reigniting

 

However, on the first day of the ceasefire, Israel launched large-scale airstrikes against Lebanon, and Iran again closed the Strait of Hormuz, leading to renewed tensions. Gold sharply retraced its gains in late trading, ending up only 0.3% to close around $4,719. Analysts believe the current rebound is more of a “relief rally”; negotiations still face many obstacles, and whether the Strait of Hormuz reopens will be crucial.

　　

was slightly down, currently trading near $4,710/oz; analysts point out gold may remain choppy in the short term, but in the medium to long term, amid geopolitical uncertainty and a potential rate-cutting environment, it still has allocation value. Investors should closely watch this week’s US

 

Ceasefire triggers a relief rally, gold soars

　　

 

The core logic behind this gold rally is straightforward. The ceasefire agreement directly pushed oil prices below $100/barrel, while the dollar index fell to a one-month low against a basket of major currencies. For gold, a weaker dollar means gold denominated in dollars becomes cheaper for holders of other currencies, fueling buying demand. More crucially, the plummet in oil prices significantly eased concerns that inflation would deteriorate further—worries that had been a major headwind for gold in the previous weeks.

Marex analyst Edward Meir gave a clear interpretation, stating that the ceasefire calms the market and relieves pressure, helping to ease some inflationary pressures and potentially reopening the door for the Fed to cut rates—an unequivocal positive for gold.

From the performance of the interest rate futures market, investors’ expectations are indeed shifting. After the ceasefire news, the probability of the Fed cutting rates at least once by the end of this year climbed to around 65%, a stark contrast to the pre-ceasefire pessimism when the market ruled out rate cuts and began betting on a hike.

Optimism unravels, gold tumbles from highs

However, the gold bull party did not last. As more details emerged, investors realized the ceasefire was far more fragile than imagined, leading gold prices to fall sharply from the intraday highs.

The core problem is that the so-called US-Iran ceasefire does not equate to real easing of tensions in the Middle East. On the same day the US and Iran agreed to suspend direct hostilities, Israel escalated military operations against Lebanon, launching its biggest airstrikes against Hezbollah since the start of this round of conflict. Iran responded toughly, accusing Israel of violating the ceasefire agreement, closing the Strait of Hormuz again, and threatening deterrent actions against Israeli military targets. Further complicating matters, Iranian parliamentary speaker Kalibaf explicitly stated that three key provisions in Tehran’s 10-point ceasefire plan had already been violated, undermining the negotiation framework.

What does this fragile ceasefire situation mean? It means all the market’s previous optimistic pricing based on peace expectations may have to be revised. The Strait of Hormuz remains closed, about 20% of global oil transport is still blocked, oil prices, though down from highs, remain about 30% above pre-war levels. Inflationary pressure has not truly dissipated—only temporarily masked by the ceasefire news.

As a result, gold quickly retraced gains after hitting a three-week high. The market began to reassess the sustainability of the ceasefire agreement and its real impact on the Fed’s monetary policy path. Investors realized that against the backdrop of Israel continuing attacks on Lebanon and Iran re-closing the Strait of Hormuz, the so-called inflation relief may be short-lived.

The Fed’s dilemma: rate hike threat remains

The current tug-of-war in the gold market stems largely from huge uncertainty over the Fed’s policy outlook. From the FOMC minutes released Wednesday, divisions among policymakers are deepening—a situation with complex, bidirectional implications for gold.

The minutes show more Fed officials now believe, considering the inflationary shock from the Iran war, that rate hikes might be needed to deal with inflation persistently above the 2% target. Some participants explicitly wanted the post-meeting statement to keep both options—rate hikes and rate cuts—to reflect that if inflation stays above target, it may be appropriate to raise the federal funds rate target range.

This is in sharp contrast to the market consensus before the war. Prior to the outbreak on February 28, the market expected about two US rate cuts this year. The war-driven surge in oil derailed this, forcing investors to reprice the Fed’s rate path.

Interestingly, the minutes also revealed another point: most participants judged that if the Middle East conflict drags on, inflicting enough damage on economic growth, then more rate cuts may be needed to support the economy. Surging oil prices would depress household purchasing power, tighten financial conditions, and drag down overseas growth—factors that could force the Fed to ease even before inflation is brought fully under control.

This policy dilemma leaves the gold market in a bind. If the Fed hikes because of high inflation, the opportunity cost for holding gold rises—putting pressure on prices. But if the Fed cuts due to economic harm, a weaker dollar and easier liquidity support gold. The current volatility in gold is the result of the market swinging between these two possible outcomes.

Geopolitical uncertainty: gold’s firmest support

From a broader perspective, current Middle East developments actually present a relatively favorable environment for gold—not because of the ceasefire itself, but because it is so fragile and the prospects for peace are so bleak.

Although the US has reached a temporary ceasefire with Iran, the Trump administration is considering punishing NATO countries that did not give enough support during the Iran war, planning to withdraw US troops from those countries and redeploy them to stronger supporters. This policy direction will only worsen cracks with US traditional allies and undermine global geopolitical stability.

Iran, despite agreeing to the ceasefire, has clearly stated that the basis for negotiation has already been damaged. Both sides hold firm to different versions of the ten-point plan; whether the US’s fifteen-point proposal can align with Iran’s terms, and whether Israel will change course on Lebanon, remain key variables impacting the peace process. Whether the first round of US-Iran talks scheduled for this Saturday in Islamabad, Pakistan, can proceed as planned is still highly uncertain.

This high degree of geopolitical uncertainty is precisely the best soil for gold as a safe-haven asset. Every time a crack appears in a ceasefire agreement, or negotiations face obstacles, investors flock back into gold seeking safety. Even after the risk rally on ceasefire news, gold only pulled back from highs—it did not fully reverse and finished higher, which itself shows the safe-haven demand never truly faded.

Inflation data incoming: a new test for gold

Looking ahead to the next few sessions, gold will face another major catalyst: the release of US inflation data. Both the Personal Consumption Expenditures Price Index and the Consumer Price Index—two key inflation measures—are due out later this week.

The importance of these data is that they will provide the Fed with the latest basis for rate decisions. If the data shows persistent or even rising inflationary pressure, the possibility of rate hikes noted in the minutes will become more real, which is obviously not bullish for gold. Conversely, if inflation cools off, market expectations for Fed rate cuts could heat up again, boosting gold.

From the inflation-protected bond market’s performance, the market currently expects an average annual inflation rate of about 2.3% over the next decade—a level higher than the Fed’s target, but not out of control. The key is that the path of Middle East events will largely determine how much actual inflation deviates from this expectation.

It is worth noting that even if the ceasefire agreement holds, any transmission of lower oil prices to end-consumer prices will take time. What’s more, given how fragile the current ceasefire is, and how easily the Strait of Hormuz could become a geopolitical flashpoint again, investors will inevitably remain highly vigilant about the inflation outlook—this cautious mindset itself supports gold’s safe-haven demand.

Conclusion: Gold at the crossroads

In sum, the gold market is now at a crucial crossroads. On the one hand, the temporary US-Iran ceasefire does alleviate the most extreme tail risks and has triggered relief rallies in risk assets—diverting some capital that might otherwise flow into gold in the short term. On the other hand, the ceasefire’s foundation is extremely fragile: Israeli military actions in Lebanon, Iran’s renewed blockade of the Strait of Hormuz, and fundamental gaps in US-Iran negotiating positions—all these factors mean the situation could escalate at any time.

For gold investors, the key now is not to guess whether the ceasefire will last, but to recognize a fundamental reality: Middle East geopolitical risks have not disappeared, the global inflation outlook remains highly uncertain, and the Fed’s policy path is still shrouded in fog. In this environment, gold’s value as a safe-haven and inflation hedge has not diminished. In fact, it has become even more prominent amid intertwined uncertainties.

In the short term, gold prices are likely to remain highly volatile, swinging with ceasefire negotiations and inflation data. But over a longer horizon, as long as there is no sustainable peace in the Middle East and no fundamental improvement in global supply chain fragility, gold will remain an indispensable ballast stone in investment portfolios.