Gold shot up 2% on the heels of a two-week ceasefire announcement between the United States and Iran. Within the first half hour, bullion soared to three-week highs. However, this optimism didn’t last long. The truce fell apart in less than a day, and full clarity on the Strait of Hormuz remains as elusive as ever. So where do things stand? The waterway’s regular traffic is still on hold, and the risk of fresh clashes in the region is very much alive. One spark, and the market could snap back into flight-to-safety mode in no time. And here’s the counterintuitive part: in this conflict, gold tends to sink when geopolitical heat turns up, not rise.
Wednesday’s release of the Federal Reserve’s (Fed) March meeting minutes confirmed what many had suspected: inflation is rearing its head again. The central bank kept its tone cautious, acknowledging that the Middle East energy shock is feeding into prices, yet it refused to rush into a monetary response. Instead, the American regulator left the door open to flexibility amid ongoing uncertainty. While recognizing the economic growth dangers posed by high oil prices, policymakers emphasized that solid macro data does not yet warrant an immediate rate hike. The market read the minutes as neutral with a slight hawkish lean. For gold, this subtle undertow is adding unwanted weight.
All these crosscurrents are setting the stage for an extremely tense Friday, when the March inflation report hits the tape. Analysts see a modest acceleration, driven mainly by a sharp spike in fuel costs. Such an outcome would confirm that price pressures are entrenched, leaving the Fed with less room to ease in the months ahead. But the real danger lies to the upside. If the numbers blow past expectations, the precious metal could be staring down a test of the $4,600 support—with further downside being on the table.
The ultimate recommendation is to sell gold if it breaks down from the ascending channel, targeting $4,500 within one to two weeks. To mitigate risks in the event that the market moves against us, place a Stop Loss order 1% above the entry level.
