Gold and Silver Pull Back on Iran Ceasefire Uncertainty

 

Gold and Silver Pull Back on Iran Ceasefire Uncertainty

(Bullion News Network) – Gold and silver prices retreated on Monday as traders grappled with uncertainty surrounding the ceasefire between the United States and Iran. The two countries agreed to a ceasefire earlier in April after over a month of fighting. According to U.S. President Donald Trump, the ceasefire is expected to end on Wednesday, and an extension is “highly unlikely.”

The spot price of gold pulled back by less than $10 per troy ounce to begin the trading week. Silver shed under $1/ozt but regained ground above $80 per troy ounce after markets closed on Monday. The price action favored gold, driving the gold-silver ratio approximately 1% higher.

Wall Street also retreated on the news, which could signal more uncertainty on the way surrounding the Strait of Hormuz, a vital chokepoint for the global crude oil trade. The Dow, Nasdaq, and S&P 500 all closed lower on Monday after Trump announced that the ceasefire between Iran and the U.S. could be coming to an end.

News concerning the conflict with Iran is expected to remain a major factor in where precious metal prices move throughout the week. Fresh hostilities between the U.S. and Iran could drive demand higher for safe haven assets like gold and silver, although the longstanding correlation between geopolitical tensions and gold was less-than-clear throughout much of March.

It is “highly unlikely” that Trump will expand the deal, the American leader said on Monday.

I’m not going to be rushed into making a bad deal. We’ve got all the time in the world.

Wall Street surged last week as the ceasefire held and Trump announced that Iran had reopened the Strait of Hormuz, which it closed in early March. Despite the reopening of the waterway, the U.S. continued a blockade on the Strait of Hormuz that began last Monday. Over the weekend, President Trump announced that the U.S. had seized an Iranian tanker attempting to evade the blockade. Iranian leaders vowed vengeance for what they called an act of maritime piracy.

For their part, precious metal prices jumped on the news as well, with silver setting a monthly high. Prices pulled back on Monday after Trump suggested the ceasefire between the U.S. and Iran may not continue amid revived tensions and the lack of a clear path to permanent peace.

In a Truth Social post, Trump claimed that although the war with Iran has only been happening for a short amount of time, the U.S. does not feel rushed or pressured to make a deal.

[News companies] like to say that I promised 6 weeks to defeat Iran, and actually, from the Military standpoint, it was far faster than that, but I’m not going to let them rush the United States into making a Deal that is not as good as it could have been. I read the Fake News saying that I am under “pressure” to make a Deal. THIS IS NOT TRUE! I am under no pressure whatsoever, although, it will all happen, relatively quickly!

On the interest rate front, traders expect few surprises between now and the FOMC’s April meeting. CME FedWatch projects a 100% probability that the central bank will opt to leave interest rates unchanged. Several Fed officials, including Fed Chair Jerome Powell, suggested in March that the FOMC remains in a good position to “wait and see” whether price hikes due to the war in Iran were momentary jumps or translate into larger trends.

Fed uncertainty could still crop up later this month, however, as Republicans attempt to overcome opposition from Democrats and Thomas Massie, who vowed to block any nomination until the DOJ investigation into Jerome Powell is concluded. Read more about that situation here.