Gold prices climbed on April 8 after the United States and Iran agreed to a two-week ceasefire, sending oil prices plunging.

Spot gold jumped more than 3% to around US$4,854.10 per ounce as at noon, while gold futures rose 2%.

The precious metal has remained down about 7% over the past month and about 13% below its record high of US$5,589 on Jan 28.

The US-Iran ceasefire deal also sent the US dollar weakening against other major currencies, with the Bloomberg Dollar Spot Index falling 0.7%.

Against the Singapore currency, the US dollar dropped 0.5% to S$1.2750 after earlier touching S$1.2741, its lowest intraday level since March 24.

Link between oil prices and gold

Lower energy prices leads to lower inflation.

This raises expectations that central banks, especially the US Federal Reserve, will not need to raise interest rates to fight rising inflation.

When interest rates remain high, investors tend to sell gold – which earns no interest – to purchase other assets like bonds that do.

Additionally, since gold is priced in US dollars, bets that interest rates will fall often weakens the dollar, which makes gold cheaper to purchase for investors holding other currencies, thus increasing demand and prices.

OCBC foreign exchange strategist Christopher Wong said the jump in gold price reflects a “partial unwinding of geopolitical risk premium” that had weighed on bullion since March.

“The next leg from here depends on whether the ceasefire holds and whether lower oil prices revive room for US Federal Reserve interest rates easing,” he said.

Mr Alex Ho, sales trader at CMC Singapore, struck a more cautious tone, noting that the spike in gold prices was a “classic knee-jerk behaviour”.

“The ceasefire announcement made many rush to take profits or reposition. Underlying supports, like central bank buying, a softer dollar and sticky inflation, remain in place. But the ceasefire removes one of gold’s key near-term props: the energy shock premium,” he said.

“If the ceasefire holds and oil keeps falling, the safe-haven bid will quickly disappear… Gold then needs a clear drop in US real yields or a fresh downturn in risk sentiment to climb higher.

“Without that, a consolidation is more likely than a continuation of higher prices, and the dollar index and treasury yields will signal gold’s next move better than any diplomatic statement,” he added.

Gold prices soared 60% in 2025 driven by geopolitical risks, expectations of lower interest rates and central bank purchases. Its record run continued in 2026 before the Iran war saw bullion lose all of this year’s gains.

The People’s Bank of China remains a key buyer, purchasing the most gold in more than a year in March.

Its bullion holdings rose by 160,000 troy ounces, extending its buying streak to 17 consecutive months.

straitstimes.com