Gold prices saw a modest uptick in Asian trade on Wednesday after suffering sharp losses in the previous session, as a weaker U.S. dollar helped to provide some relief, despite the easing of geopolitical tensions following the ceasefire between Israel and Iran.
Spot gold rose 0.2%, reaching $3,329.93 an ounce, while gold futures for August gained 0.3%, trading at $3,344.70 per ounce by 02:16 ET (06:16 GMT).
This recovery comes after gold fell over 1% on Tuesday following President Donald Trump’s announcement that a ceasefire between Israel and Iran had come into effect. The truce has somewhat reduced demand for the traditional safe-haven asset, which is typically sought during times of geopolitical uncertainty.
Israel-Iran Truce Dampens Safe-Haven Demand for Gold
President Trump’s ceasefire declaration on Monday night called for both parties to uphold the agreement, urging Israel and Iran to refrain from further hostilities. However, despite the ceasefire announcement, concerns lingered over its sustainability. Within hours of the announcement, Trump took to social media to accuse both sides of failing to meet their commitments, further fueling doubts about the ceasefire’s longevity.
Gold, often seen as a hedge against geopolitical instability, has faced downward pressure as the situation between Israel and Iran appeared to stabilize. However, uncertainty over the durability of the ceasefire continues to provide some support to gold prices.
Additionally, a weaker U.S. dollar helped lift gold prices slightly. The U.S. Dollar Index fell by 0.1%, hovering near a one-week low, further contributing to gold’s appeal.
Federal Reserve and Tariff Concerns Weigh on the Market
Federal Reserve Chair Jerome Powell, in his testimony before Congress, highlighted the uncertainty surrounding monetary policy, indicating that the central bank is awaiting further data to determine if rising tariffs lead to increased inflation. This ongoing uncertainty around U.S. economic policy continues to create volatility in the markets.
Broader Metals Rise, Supported by Weaker Dollar
Meanwhile, broader metal markets saw some gains as the weaker dollar made commodities more affordable for foreign buyers. However, the overall risk-on sentiment weighed on precious metals, limiting their upside.
Silver futures rose 0.5%, trading at $35.928 per ounce, while platinum futures were largely unchanged at $1,318.15 per ounce. Meanwhile, copper futures on the London Metal Exchange rose 0.5% to $9,723.35 per ton, while U.S. copper futures remained unchanged at $4.9015 per pound.
Despite the recovery in gold prices, market sentiment remains cautious as investors continue to monitor developments in both the geopolitical and economic landscapes.