Gold trading alert: U.S. dollar collapse + Iran ceasefire prospects, gold prices rebound for four consecutive days, market focuses on Trump's speech!

Reuters Finance APP News — Driven by the dual factors of a weakening dollar and expectations of easing tensions in the Middle East, gold prices rose for the fourth consecutive trading day on Wednesday, April 1. Spot gold briefly touched a high of $4,792 per ounce before closing up 1.9% at $4,758 per ounce. U.S. gold futures surged 2.9% to $4,813.10. Currently, investors are closely watching President Trump’s upcoming national address. Will the conflict truly de-escalate? Can the Fed’s rate cut expectations be reignited? These uncertainties are making the gold market a focal point for global capital flows.

Weakening dollar and risk appetite boost technical rebound in gold

On Tuesday, the dollar index fell for the second consecutive day, ending at 99.55, down 0.33%, even hitting a one-week low during the session. This directly increased the attractiveness of dollar-denominated gold for holders of other currencies. A weaker dollar is often a key support for gold prices because it lowers the barrier for non-U.S. investors to buy gold.

Meanwhile, cautious optimism about a possible easing of Middle East tensions further boosted risk assets. Trump posted on Truth Social that Iran had requested a ceasefire, though the Iranian Foreign Ministry quickly denied this, but discussions are indeed ongoing. Trump is scheduled to deliver a nationwide speech on Thursday morning Beijing time, providing “important progress” on Iran. These signals have prompted some safe-haven funds to shift out of gold and into stocks and other risk assets, but they also open new upside potential for gold—if the situation truly de-escalates, rate cut expectations could re-emerge, providing more sustained support for gold prices.

Bob Haberkorn, senior market strategist at RJO Futures, noted that if tensions in the Middle East ease, gold could return above $5,000 per ounce, and the reintroduction of rate cut expectations would further reinforce this trend. Currently, gold has gradually recovered from the previous correction caused by war-driven oil price hikes and inflation concerns, but volatility remains significant. Investors should closely monitor developments in the Strait of Hormuz, a critical chokepoint.

Market dominated by Middle East de-escalation expectations, safe-haven demand diverges

Since late February, when U.S.-Iran military actions erupted, ongoing attacks in the Middle East made gold the preferred safe haven. However, recent developments show hopes for a ceasefire are rising. Trump told Reuters that the U.S. will soon end its war with Iran, possibly with targeted strikes if necessary. White House officials also hinted that Trump would reaffirm a timetable to end the war within two to three weeks in his national address.

Iran, on the other hand, demands guaranteed arrangements for a permanent ceasefire to end the conflict. A senior Iranian source said intermediaries have contacted Iran, but negotiations on a temporary ceasefire have not yet begun. Meanwhile, U.S. Vice President Vance has been in ongoing communication with intermediaries in Pakistan, emphasizing that as long as demands such as reopening the Strait of Hormuz are met, Trump is willing to accept a ceasefire. Although officials from Iran’s Defense and Foreign Ministries emphasize they are prepared to respond to any attack and will target U.S. military withdrawal from the Middle East, the overall atmosphere has shifted from intense confrontation to diplomatic negotiations.

This easing expectation has directly impacted safe-haven buying of the dollar. Previously benefiting from risk aversion due to the conflict, the dollar now sees a clear reversal as risk appetite improves. Oil prices also declined, with Brent crude falling 2.7% to $101.16 per barrel, briefly dropping below $100 to $98.46 during the session. This alleviates concerns about prolonged inflation caused by supply shocks. Eugene Epstein, head of Moneycorp, analyzed that short-term inflation might rise, but fundamentally it’s a supply shock that will eventually manifest as economic slowdown. The Fed is unlikely to raise interest rates amid slowing growth, and the previous logic of a strong dollar rally is unwinding.

Nevertheless, attacks still occur in various parts of the Middle East, such as drones hitting Kuwait airport fuel tanks and missile strikes on oil tankers, keeping markets cautious. The IEA, IMF, and World Bank have coordinated responses to the global impact of the war, warning that its effects are “significant, global, and highly asymmetric.” These factors mean gold’s safe-haven attributes have not fully diminished but are now being traded as expectations of “policy easing after de-escalation.”

U.S. economic data remain resilient, and Fed rate path faces re-pricing

While geopolitical concerns remain in focus, U.S. domestic economic data are also key variables influencing gold. The ADP national employment report released Wednesday showed that U.S. private-sector jobs increased by 62k in March, beating expectations and continuing steady growth after revisions in February. Retail sales in February also rebounded strongly, rising 0.6%, exceeding forecasts.

On the manufacturing front, the ISM Manufacturing PMI rose to 52.7, the highest since August 2022, with the prices paid index soaring to 78.3, indicating increased input costs. These data reinforce the market’s view of the resilience of the U.S. economy, pushing U.S. Treasury yields slightly higher, with the 10-year yield rising to 4.313%. However, analysts note that the ADP report lacks breadth, and after inflation adjustment, actual retail sales in the first quarter may have contracted.

Focus this week shifts to Friday’s March non-farm payroll report, with economists forecasting an increase of 60k jobs. A sharp deterioration in the labor market could reignite expectations for rate cuts this year. Previously, fears of Iran war pushing oil prices higher and inflation concerns had largely priced out rate cuts. Now, as the war’s end seems possible, the view that energy prices have peaked is gaining traction, with interest rate futures shifting from pricing hikes to small cuts, with about 7 basis points of easing priced in.

Kevin Flanagan, head of fixed income strategy at WisdomTree, said that the Fed is very likely to hold steady in the short to medium term, assessing the impacts of war, inflation, and the economy. If the war ends before the new Fed chair takes office in summer, markets will refocus on traditional monetary policy factors. These shifts are a double-edged sword for gold: a strong economy may suppress rate cut benefits, but easing expectations from de-escalation provide positive support.

Trump’s “NATO withdrawal” remarks add uncertainty, outlook for gold

Trump’s statements go beyond Iran. He said he is “absolutely” considering withdrawing the U.S. from NATO, criticizing NATO for not supporting the U.S. in the war and calling it a “paper tiger.” This further exacerbates U.S.-Europe differences and adds variables to the global geopolitical landscape. European countries emphasize that NATO’s actions in the Strait of Hormuz may violate international law.

Additionally, Trump stressed that U.S. actions have ensured Iran cannot acquire nuclear weapons and plans to announce related progress in his speech. While these comments show a desire for a quick U.S. withdrawal, they also imply that military options are not entirely ruled out. Iranian intelligence assessments believe they are in a favorable position and have no intention of substantive negotiations, further complicating the situation.

Overall, gold will likely continue to be driven in the short term by expectations of Middle East ceasefire and dollar movements. If Trump’s speech signals clear de-escalation, gold could test higher resistance levels; if conflicts persist or new attacks escalate, safe-haven demand will push gold higher again. In the long run, Fed policy shifts, economic slowdown expectations, and global energy market recovery will determine whether gold can break above $5,000 and stabilize.

In summary, the current gold market is at a sensitive juncture where geopolitical easing and macro policy expectations intertwine. Investors should stay alert, closely monitor Trump’s speech, Middle East diplomacy, and upcoming U.S. employment and inflation data. Amid ongoing uncertainties, gold remains a valuable diversification tool, though short-term volatility may intensify. In the coming days, market direction could determine whether this rebound evolves into a new sustained rally.

On Thursday, April 2, during Asian trading hours, spot gold continued its upward trend, reaching a high of $4,800.33 per ounce at 07:31, up about 0.89% from the previous close.

(Spot gold daily chart, source: EasyForex) As of 07:31 Beijing time, spot gold is quoted at $4,796.24 per ounce.