Expectations for a second round of talks between the US and Iran have been reignited: the price of gold has leveled off its decline and surged back to $4800, while crude oil plummeted by 8% to the $90 mark.

Notice that after two consecutive days of decline, as optimism about the end of the US-Iran war through negotiations rekindled, easing market concerns about inflation, the price of gold rose. The price of silver rose to its highest level in nearly a month. The price of gold rose by 2.2% to $4,846.33 per ounce, erasing the losses from the previous two trading days. The US and Iran are seeking to hold the second round of peace talks in the future, with Tehran considering suspending shipping through the Strait of Hormuz to facilitate reaching an agreement on the time and place of the negotiations. According to sources, the goal of this round of talks is to have more discussions before the ceasefire agreement expires on April 7th next week. One proposal is to return to Pakistan, where preliminary talks were held last weekend, although other locations are also under consideration. Inflation pressure weighs on gold prices Oil prices fell and fell below $100 per barrel, while the stock market rose. The index measuring the trend of the US dollar fell for the 7th consecutive trading day, setting a record for the longest continuous decline in two years, providing support for gold priced in US dollars. The fall in energy prices has eased some inflation pressures, which have been weighing on the price of gold since the war broke out over six weeks ago. Concerns about rising consumer prices had led traders to bet that central banks in various countries would maintain interest rates for a longer period of time, or even raise them which would be a bearish factor for non-yielding commodities. Nevertheless, concerns about further energy supply shocks and economic pain persist, especially given the US blockade of ships entering and leaving Iranian Gulf ports or coastal areas, intensifying pressure on Tehran. Due to the tense situation, the US currency market still sees less than a one-fifth chance of the Fed cutting rates before December. Justin Lin, investment strategist at Global X ETFs Australia, said, "The current logic of gold trading is still interest rate expectations rather than a safe-haven tool, so with hopes of a cooling overnight situation, gold is benefiting in sync with the stock market." He added that while short-term inflation concerns are putting pressure on gold prices, the high and sustained oil prices may eventually lead to a slowdown in economic growth, which historically is bullish for gold. Despite a mild rebound in recent weeks, the price of gold has fallen by about 10% since the conflict began at the end of February. Investors had sold gold positions during the initial liquidity crunch in order to offset losses in other areas. As of writing, spot gold rose by 2% to $4,841.23 per ounce. Silver rose by 5.3% to $79.58. Both platinum and palladium recorded gains. Bloomberg's dollar spot index, which measures the trend of the US dollar, fell by 0.3%. Decline in oil demand After the White House signaled the possibility of a second round of peace talks between the US and Iran, oil prices fell significantly. The May delivery of US crude oil futures fell by nearly 8% to $91.28 per barrel. The June delivery of the international benchmark Brent crude oil fell by over 4% to $94.79 per barrel. A White House official said on Tuesday that the Trump administration is considering further negotiations with Iran, although a specific timetable has not yet been determined. Vice President JD Vance said on Monday that after the failed talks in Islamabad, Pakistan over the weekend, "the ball is in Iran's court." Vance said in an interview, "Whether we will have further dialogue, whether we will eventually reach an agreement, I really think the initiative is in Iran's hands, because we have offered many generous terms." The US Navy began a blockade of Iranian ports in the Persian Gulf on Monday in an attempt to force Iran to make concessions. Vivek Dhar of the Commonwealth Bank said the blockade "directly threatens" Iran's oil exports through the Strait of Hormuz, which were around 1.7 million barrels per day last month. He noted, "Therefore, the blockade further tightens the physical crude oil and refined oil markets." The International Energy Agency (IEA) predicted on Tuesday that the oil supply shocks triggered by the Iran war will lead to a decline in demand this year as consumers react to surging fuel prices. The agency expects oil demand to decrease by 1.5 million barrels per day in the second quarter, the largest drop since the onset of the COVID-19 pandemic. It is forecasted that demand for the entire year will decrease by 800,000 barrels per day, a significant shift from the IEA's previous forecast of consumption growth of 640,000 barrels per day.