Now in its sixth week, the war has heightened the prospects that central banks will delay cutting interest rates or even hike them
Published Tue, Apr 7, 2026 · 09:02 AM
[SINGAPORE] Gold steadied after a two-day decline, as traders weighed US President Donald Trump’s latest threat to destroy Iranian infrastructure and the impact of a protracted war on inflation and economic growth.
Bullion was near US$4,660 an ounce in early trading, having lost more than 2 per cent over the previous two sessions. Trump set a deadline of 8 pm Eastern Time on Tuesday (Apr 7) to reach a deal with Teheran or begin attacking power plants and bridges, raising the stakes in a conflict that’s caused a global fuel squeeze and stoked inflation fears.
Now in its sixth week, the war has heightened the prospects that central banks will delay cutting interest rates or even hike them. US Treasuries held small gains on Monday after Trump’s latest threats, with bond traders expecting the Federal Reserve to keep rates steady through the rest of the year. Higher borrowing costs weigh on gold as the metal does not pay interest.
Countering this trend, however, cost pressures from the energy-supply shock are also weighing on economic growth, which is supportive for gold. The US service economy expanded at a slower pace in March as employment shrank by the most since 2023 and input prices accelerated sharply.
Gold has fallen about 12 per cent since the conflict in the Middle East began at the end of February, with the metal’s traditional haven appeal also weakened by the need for investors to liquidate positions to cover losses elsewhere. The metal has moved largely in an inverse relationship with oil, which rose on Tuesday for a third day.
Trump insisted in a media conference on Monday that the Strait of Hormuz be reopened as part of any deal with Iran to end the war. The maritime chokepoint linking the Persian Gulf to global markets has remained largely closed to shipping since the conflict began. Teheran has so far rejected US proposals for ending the war and warned it would respond to more strikes by ramping up its own attacks in the Middle East.
Spot gold edged up 0.2 per cent to US$4,659.25 an ounce at 7.08 am Singapore time. Silver climbed 0.3 per cent to US$73.07. Platinum advanced, while palladium was little changed. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after ending the previous session down 0.1 per cent. BLOOMBERG
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