Gold rallied following this morning's announcement of a two-week ceasefire between the US and Iran. Contingent upon safe passage through the Strait of Hormuz, this agreement provides a critical window for long-term peace negotiations and successfully defuses immediate escalation risks. Markets have aggressively priced in this opportunity for de-escalation, triggering sharp cross-asset rotations. Oil slumped below the USD100 mark as immediate escalation risks were priced out of the energy complex, while gold rose more than 2% to breach USD4800, driven by a retraction in real rates. Conversely, industrial metals currently present a more mixed bag, with copper failing to ride on the broader rally so far.
Looking ahead, the sustainability of this temporary truce will likely dictate the next directional move for gold. The critical metric to monitor is the recovery of shipping volumes through the Strait of Hormuz. If vessel throughput normalises to a credible rate during this two-week window, it will establish a favorable foundation for a more definitive, long-term ceasefire that should continue to support gold's upward trajectory. The normalisation of trade routes and stabilisation of freight and energy costs should similarly unlock favourable upside for industrial metals.
Beyond these geopolitical swings, gold's structural demand remains robust. The PBoC extended its purchasing streak to a 17th consecutive month in March, adding 160,000 troy ounces to its reserves.
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