"Trump extends ceasefire fails to conceal negotiation deadlock, gold stabilizes after the largest two-week drop."

Gold prices fell to their biggest drop in over two weeks after U.S. President Trump announced plans to extend the ceasefire with Iran, while diplomatic negotiations between the two countries were canceled. On Tuesday, Trump posted on Truth Social that the ceasefire would be extended until negotiations are concluded, while the U.S. continues to maintain the blockade on the Strait of Hormuz (a key oil shipping route). In response to this news, the price of gold initially dropped by 3.1%, but later narrowed some of the losses. Following Trump's extension of the ceasefire with Iran and the collapse of a new round of peace talks, gold stabilized within the previous two days' trading range. In early trading, the price of gold hovered around $4720 per ounce, after dropping more than 2% on the previous trading day. Trump stated that he would hold off further strikes until Iran submits a new proposal "and concludes discussions". Meanwhile, the shipping route of the Strait of Hormuz remains closed, with Iran stating that as long as the U.S. continues to blockade vessels entering and leaving the country, they will not reopen this crucial waterway. Oil prices remained on the rise on Wednesday, while the U.S. dollar index rose by 0.4% in the previous trading session, putting pressure on gold priced in dollars. The war has entered its eighth week, causing unprecedented energy supply disruptions, exacerbating inflation risks, making central banks more likely to keep interest rates unchanged or even hike them - a headwind for non-yielding gold. Prior to this, Federal Reserve Chair nominee Kevin Walsh stated that the Fed needs to create a new framework to address sustained inflation, but did not provide further details, which also weighed on gold prices. Walsh is known for his hawkish stance on inflation. The market expects him to not cut interest rates drastically as Trump urged, but rather to take a cautious approach to gradually lowering borrowing costs. Manav Modi, a commodities analyst at Motilal Oswal Financial Services based in Mumbai, stated in a report that the market "remains anxious about whether new talks can be reached before the ceasefire expires this week as conflicting signals from both sides intensify volatility". "With continued uncertainty in geopolitical and policy prospects, gold continues to face pressure." Since the conflict erupted at the end of February, gold prices have fallen by around 11%. The initial liquidity squeeze during the conflict prompted investors to sell gold to offset losses in other assets in their portfolios. A trader with Heraeus Precious Metals, Marc Loeffert, wrote in a report, "In times of cross-asset volatility, some position adjustments and deleveraging can be expected." "This volatility may continue for some time, but in the long run, gold as a way to preserve purchasing power will retain its fundamental appeal." At the time of writing, spot gold rose by 0.27% to $4732.93 per ounce. Silver rose by 0.67% to $77.20 per ounce. Platinum and palladium also experienced declines. The Bloomberg Dollar Spot Index, which measures the U.S. dollar's value, rose by 0.4%.