Gold Caught Between Peace Expectations and Inflation Concerns as Prices Search for Direction!
The situation in the Middle East remains the core driver of the gold market at present. The U.S. and Iran are currently negotiating a ceasefire agreement. Trump stated at the White House that talks over the past 24 hours had progressed smoothly and that the chances of reaching an agreement were high, leading market sentiment to become cautiously optimistic.
However, Iran quickly poured cold water on expectations. According to reports, senior Iranian officials clearly stated that they would not allow the United States to reopen the Strait of Hormuz under unrealistic terms.
Meanwhile, Iran also introduced new rules for commercial vessels transiting the strait, requiring ships to coordinate passage with the Iranian military. There are even reports suggesting that transit fees could be as high as $2 million per voyage.
The Strait of Hormuz handles approximately 20% of global oil transportation, and the continuing tensions have directly pushed oil prices higher, further intensifying market concerns over inflation.
On the monetary policy front, comments from Federal Reserve officials have remained broadly hawkish.
The President of the Boston Fed clearly stated that current interest rates may need to remain unchanged for a longer period and warned that inflation risks are increasing, without ruling out the possibility of further rate hikes in the future.
Under expectations of higher interest rates for longer, gold’s attractiveness has been pressured. As a non-yielding asset, a high-interest-rate environment directly weakens its relative investment appeal.
Several U.S. economic indicators released this week suggest that the labor market still retains a degree of resilience.
The ADP private employment report showed that 109,000 jobs were added in April, exceeding market expectations of 99,000 and significantly improving from March’s 61,000 reading.
Initial jobless claims came in at 200,000, slightly below the market expectation of 205,000, remaining overall within a healthy range.
Market attention is now turning to Friday’s nonfarm payrolls report, which will provide a more important reference point for the Federal Reserve’s future policy path and directly influence short-term gold price movements.
Despite short-term volatility pressures, the medium- to long-term fundamental support for gold remains solid.
Data shows that the People’s Bank of China has increased its gold holdings for 18 consecutive months, with official reserve demand continuing to send a strong signal.
Once Middle East tensions ease and oil-driven inflation pressure fades, the Federal Reserve’s policy focus could shift back toward employment, while a weaker dollar and renewed investor and central bank demand could reignite the gold bull market, with upside targets above $5,200 per ounce.
Market Interpretation
On the four-hour chart, gold is rebounding after a decline, with MACD lines and volume bars converging above the zero axis.
The current gold market is being driven by three major variables: progress in U.S.–Iran negotiations, Federal Reserve policy expectations, and energy price movements. This combination makes it difficult to clearly determine short-term direction.
If substantial progress is made toward a peace agreement, gold could potentially move toward the $5,000 level. However, if negotiations once again fall into stalemate and oil prices remain elevated, rising inflation expectations could instead create two-way pressure on gold prices.
