Gold price stabilizes after a one-day surge of 3%, but Federal Reserve officials continue to sing hawkish tunes: Inflation has not yet reached the target, victory should not be prematurely declared.

The price of gold stabilized after achieving its largest single-day increase since late March, with traders assessing the optimistic outlook of a ceasefire agreement between the US and Iran, which could lead to a sharp drop in oil prices and ease concerns about inflation. Gold prices surged by 3% on Wednesday, currently trading around $4,690 per ounce. The drop in energy prices has put pressure on bond yields, while the US dollar has fallen back to pre-conflict levels, providing support for gold priced in dollars and not bearing interest. Iran is reportedly evaluating a new proposal from the US to end the nearly 10-week conflict. President Trump has hinted multiple times during the conflict that an agreement is forthcoming, but it has yet to materialize. On Wednesday, he stated on social media, "If Iran agrees to the terms that have already been reached" - although this may be a big assumption - the US will end military operations and lift the blockade on the Strait of Hormuz. Strategists at TD Securities, including Ryan McKay, stated in a report, "News regarding a potential peace agreement has boosted precious metals and base metals markets in early trading today. However, we caution that this news is still subject to reversal as demands from both the US and Iran seem unchanged from previous plans." Despite market pricing in optimistic expectations, Chicago Fed President Gurley and St. Louis Fed President Mousalem expressed caution, emphasizing that the current inflation rate remains above the target level of 2%. Since the conflict erupted at the end of February, gold prices have fallen by about 11%. The energy price shock caused by the blockade of the Strait of Hormuz at that time intensified market concerns about rising inflation and the long-term maintenance of high interest rates. As of the time of writing, spot gold is trading at $4,715.05 per ounce, holding steady. Silver, after surging by 6.2% on Wednesday, is currently trading at $78.23, with little change. Platinum and palladium have risen. The Bloomberg Dollar Spot Index, which measures the trend of the US dollar, fell by 0.6% the previous trading day and edged down by 0.11% today.