Gold and Silver Down as Strait of Hormuz Standoff Continues

 

Gold and Silver Down as Strait of Hormuz Standoff Continues

(Bullion News Network) – Gold and silver prices changed little to start the trading week on Monday. The spot price of gold retreated by just over $26 per troy ounce, falling below $5,700/ozt. Silver prices moved similarly, shedding less than $0.10 per troy ounce before settling at approximately $75.75/ozt. The price action marginally favored gold, driving the gold-silver ratio around 0.32% higher to approximately 62.30:1.

Platinum-group metals also pulled back on Monday. The spot price of platinum shed nearly $30 per troy ounce, while palladium lost approximately $22/ozt. The price of oil opened the week high again, gaining more than $2 per crude barrel on Monday as a standoff between the United States and Iran continued to complicate trade along the Strait of Hormuz.

A fresh round of peace talks was canceled over the weekend, but U.S. President Donald Trump suggested in a Truth Social post that American officials may consider offers made by Iran over the phone.

I just cancelled the trip of my representatives going to Islamabad, Pakistan, to meet with the Iranians. Too much time wasted on traveling, too much work! Besides which, there is tremendous infighting and confusion within their “leadership.” Nobody knows who is in charge, including them. Also, we have all the cards, they have none! If they want to talk, all they have to do is call!!! President DONALD J. TRUMP

Iran submitted a new proposal to end the war over the weekend, but the prospects of its acceptance by U.S. officials are dubious. Under the proposal, Iran would reopen the Strait of Hormuz but postpone all nuclear negotiations until a later date. U.S. President Donald Trump has emphasized that securing an end to the Iranian nuclear enrichment program will be a vital component of any successful peace plan.

On Sunday, Trump suggested in a Fox News interview that he believes a prolonged blockade of the Strait of Hormuz will force Iran to come to the negotiating table. “If this line is closed because you can’t put it into containers or ships, what happens is that line explodes from within,” Trump said. “They say they only have about three days before that happens.”

In domestic news, the Federal Reserve will meet on Wednesday to vote on whether to change the federal interest rates. The FOMC is widely expected to keep interest rates unchanged for the month of April. CME FedWatch projects a 100% probability that the FOMC will opt to wait and see on interest rates this month.

On a longer timeline, interest rate movements are still up for debate. CME FedWatch sees rate cuts possible – but not likely – throughout the rest of 2026. Complicating the interest rate equation is the upcoming Senate confirmation vote of Kevin Warsh, Trump’s nominee to become chair of the Federal Reserve after Jerome Powell leaves the office in May.

Warsh’s confirmation is expected to pass in the Senate. Until last Friday, GOP Senator Thom Tillis had threatened to block Warsh’s confirmation until the Department of Justice’s investigation into current Fed chair Jerome Powell was concluded. The Justice Department dropped this investigation last week, and Tillis signaled his support of Warsh as a result in an X post.

I have been clear from the start: the U.S. Attorney’s Office criminal investigation into Chair Powell was a serious threat to the Fed’s independence, and it needed to end before I could support Kevin Warsh’s nomination […] With these assurances, I look forward to supporting Kevin Warsh’s confirmation.

It is unclear at this point which policy actions Warsh will advocate in his first months as chair of the Federal Reserve. Trump repeatedly urged Jerome Powell to cut interest rates throughout the former’s second term, and some analysts suspect he will ask the same of Warsh. But Warsh has sometimes been characterized as a hawkish economic mind who may not advocate for extreme adjustments to the federal funds rate in either direction.

Complicating matters even more, Warsh will inherit the leadership of a Federal Reserve that is still waiting to see how the war in Iran will impact consumer prices. The Federal Reserve often tends to raise interest rates when inflation numbers are on the rise. If consumer inflation resulting from the war in Iran and the closure of the Strait of Hormuz persists, Warsh may find himself in a difficult position where raising rates could be necessary.

On Wednesday, Powell will deliver his final interest rate decision and post-meeting press conference as chair of the Federal Reserve. Traders will likely pay close attention to this speech, as well as the tone and tenor of the FOMC’s decision, for cues on where interest rates could be heading next.