Gold Rallies Over 1% as Iran Reopens Key Shipping Route Amid Ceasefire

Key Highlights

• Precious metal advanced more than 1% Friday following Iran’s announcement allowing commercial ships through Strait of Hormuz during truce period
• President Trump revealed a 10-day Israel-Lebanon truce and indicated Washington and Tehran are nearing an agreement
• Crude prices tumbled significantly, with Brent contracts declining 8.3% following Iran’s foreign minister’s statement
• Bullion is tracking toward its fourth consecutive weekly advance, despite trading roughly 9% below pre-conflict highs
• Speculative investors have reduced their net long bullion holdings to the weakest position in more than 24 months

Spot gold advanced to $4,843.17 per ounce Friday morning, marking a 1.1% increase, following a post from Iran’s foreign minister Abbas Araghchi on X confirming the Strait of Hormuz would remain accessible to all commercial shipping throughout the ceasefire period.

The strategic waterway facilitates approximately 20% of global oil and natural gas transport. The effective blockade since hostilities erupted in late February triggered the most severe energy supply crisis on record and drove petroleum prices significantly higher.

Brent crude contracts plummeted 8.3% after Araghchi’s announcement. American equity index futures extended their rally on the development.

President Trump unveiled a 10-day truce between Israel and Lebanon Thursday. Israeli leader Benjamin Netanyahu validated the arrangement.

Trump indicated Iran had accepted conditions regarding nuclear armaments it had previously rejected, noting Washington and Tehran are approaching a comprehensive agreement. He stated Iran has committed to remaining nuclear-weapon-free for over two decades.

Tehran has demanded the lifting of international economic restrictions in exchange. Trump mentioned he would contemplate extending the truce if diplomatic discussions with Iran continue productively.

Discussions between Washington and Tehran could potentially restart as soon as this weekend, Trump indicated. Several European and Gulf Arab officials have projected a complete agreement might require up to six months.

Ceasefire Implications for Precious Metals

Gold faced headwinds throughout much of the seven-week period since hostilities commenced. Elevated petroleum prices intensified inflation concerns, prompting market participants to anticipate central banks maintaining current rates or implementing increases. Bullion typically underperforms during periods of elevated borrowing costs.

The American currency also appreciated during the conflict, partially because substantial domestic energy shipments insulated the US economy from supply constraints. A robust dollar increases gold’s cost for international purchasers. The greenback index was tracking toward a 0.5% weekly decline Friday.

Bullion has staged a recovery recently but remains approximately 9% lower since hostilities began in late February.

Federal Reserve Bank of New York leader John Williams stated Thursday that prevailing uncertainty complicates providing definitive rate guidance, though he continues anticipating reductions over the extended term.

Speculative Positioning Reaches Two-Year Minimum

Speculative funds reduced their net long bullion positions to the weakest level in over 24 months during the week concluded April 7, based on recent regulatory filings.

Ole Hansen, commodity strategy chief at Saxo Bank, noted the reduced positioning “diminishes the potential for additional long liquidation” and provides capacity for renewed accumulation if market conditions remain favorable.

Gold contracts were changing hands at $4,865.09 per ounce Friday morning in New York, advancing 1.2% for the session. Silver climbed 0.7% to $78.96 per ounce.

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