Gold climbed back above $4,700 an ounce on Monday after Iran submitted a new ceasefire proposal via Pakistani mediators, reversing intraday losses in a session that illustrated precisely how tightly the metal is tracking diplomatic signals from the Strait of Hormuz.
The sequence of price moves this week tells the full story. Gold fell below $4,700 after Trump cancelled a planned envoy trip to Islamabad, then recovered when the Iranian proposal emerged, then steadied again as traders absorbed the fact that the Strait remains closed regardless of diplomatic back-channels. That intraday range compression and expansion , driven entirely by news flow rather than economic data , is a structural feature of gold trading in the current environment, not a temporary anomaly. Since the conflict began in late February, gold has lost roughly 10 to 11 percent from its pre-war highs near $5,200, as analysts initially expected the crisis to push the metal through $5,000 and sustain it there. Instead, the Hormuz-driven inflation expectations that followed the oil spike have created a counterforce: central banks potentially holding rates higher for longer, which pressures non-yielding bullion even as geopolitical fear simultaneously bids it up.
The $4,700 level has emerged as the technical line the market keeps returning to. Resistance sits at $4,780 and $4,860. Support below $4,700 is $4,610. Analysts covering the metal are near-unanimous that the directional driver for the next significant move is the Hormuz situation, not central bank policy or currency flows. If the Strait reopens through negotiation, the geopolitical risk premium compresses and gold likely tests $4,600 before finding a new base. If talks break down and the blockade hardens, oil prices ratchet higher, inflation expectations embed further, and the safe-haven bid resurfaces with conviction , potentially driving a retest of $4,850 to $5,000 on a sustained escalation scenario.
The structural bull case for gold , central banks diversifying reserves away from dollar assets , remains intact but is not providing the price support it did in 2024 and early 2025. Net central bank buying has been consistent for several consecutive years, with the People's Bank of China, National Bank of Poland, and Reserve Bank of India among the largest accumulators. That buying creates a long-term demand floor. It does not prevent short-term drawdowns driven by rate expectations, and the current moment is a rare case where geopolitical risk and rate risk are pulling in opposite directions simultaneously. The Hormuz blockade raises oil prices, which raises inflation, which raises rates, which hurts gold , even as the same blockade creates the kind of economic and political instability that historically drives safe-haven flows into gold.
Trump's extension of the ceasefire on April 22, which pushed gold to $4,767, and the subsequent breakdown of talks that pulled it back below $4,700, illustrates the pace at which the market is processing these crosscurrents. The volatility is unusual for a metal that typically moves in monthly rather than hourly cycles, and it reflects the genuine uncertainty about whether the diplomatic track produces a durable agreement or a protracted standoff.
What commodity traders and ETF investors are watching
The two questions that determine gold's direction from here are the same two that have driven every significant price move since late February. First: does the Strait of Hormuz reopen? Every credible signal of reopening compresses both oil prices and gold's geopolitical premium simultaneously. Second: does the Federal Reserve signal a rate cut path despite elevated inflation? A Fed that prioritises growth over inflation control , the way it did in 2024 , is structurally bullish for gold. A Fed that holds or tightens against Hormuz-driven energy inflation is not.
ETF flows have been mixed. Physical gold ETFs saw net outflows in the weeks immediately following the conflict start, as institutional investors rotated to energy-linked positions to capture the oil spike. Those flows are now reversing as the ceasefire narrative has reduced oil's upside and gold has held $4,700 with reasonable consistency. Analyst year-end forecasts for 2026 range from $5,000 in base case scenarios to $6,300 in the event of sustained Middle East escalation. The spread between those targets is a measure of how much the Strait of Hormuz outcome matters. Watch the diplomatic calendar. It is the only chart that matters right now.
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