Wednesday saw gold reach its highest level in around a month, with spot prices reaching $4,879.52 per ounce before slightly declining as investors balanced ongoing Middle East anxiety against fresh diplomatic signals from the US and Iran. SJC gold bars in Vietnam reversed a series of losses earlier in the week, rising by as much as 2.5 million VND per ounce on the same day.
An Unpredictable Week For Bullion
The surge ends a period of volatility for the gold markets. President Donald Trump announced a US Navy blockade of Iranian ports and the Strait of Hormuz following the failure of 21-hour peace negotiations between the United States and Iran in Islamabad earlier this month, shocking commodity markets and driving up energy prices. On April 13, gold first dropped to about $4,728 per ounce before dramatically rising as both Washington and Tehran indicated that they were eager to resume talks.
A weaker US dollar helped make gold more inexpensive for holders of other currencies, and by Tuesday, it had returned to about $4,760. The metal reached its highest level since mid-March on Wednesday as it surged beyond $4,870, but later in the session, gains were curtailed by a stronger dollar, according to Invezz. “Gold prices are responding to Middle Eastern headlines in the short term, buoyed by hopes that the two nations will engage in discussions,” said Edward Meir, a Marex analyst.
Demand Is Supported By Central Banks And Inflation
Gold is still supported by structural factors outside of geopolitics. Inflation accelerated to 3.3 percent year over year in the US Consumer Price Index for March, primarily due to energy expenses associated with the ongoing conflict in the Middle East. According to the CME’s FedWatch Tool, markets now estimate a 21 percent chance of a US rate cut by year’s end, down from 40 percent a month earlier.
Additionally, central bank purchases have given prices a floor. In March, China made its biggest monthly purchase of gold in more than a year, adding a significant quantity to its holdings, which now stand at over 2,309 tons. In a similar vein, Poland’s central bank has continued to aim to grow its assets.
Vietnam Follows Worldwide Trends
Domestic gold prices in Vietnam followed the worldwide recovery. On April 13 and 14, the price of SJC gold bars dropped by 900,000 VND per ounce, to about 171.5 million VND. With prices rising back toward the 174–175 million VND range observed earlier in the month, Wednesday’s increase of up to 2.5 million VND restored those losses. Due to strong local demand and unique market dynamics in Vietnam’s gold sector, the domestic premium over foreign gold is still rather high.
Analysts warn that the outlook is still headline-driven despite Wednesday’s advances. Paul Wong, market strategist at Sprott Asset Management, stated that “if the Strait of Hormuz remains closed, markets may not follow a typical risk-off pattern,” pointing out that gold’s function as a cross-border settlement asset could increase in such circumstances.