GLOBAL MARKETS-Oil dives, stocks surge as Trump agrees two-week ceasefire

SINGAPORE – Oil dived, bonds rallied and stocks surged on Wednesday as a two-week ceasefire in the Middle East was seen as paving the way for a lasting peace and resumption of Gulf oil and gas exports.

US President Donald Trump said he agreed to suspend bombing and attacks on Iran for two weeks and that a long-term peace agreement was in progress.

US crude futures fell around 9% to USD 103 a barrel, S&P 500 futures leapt 1.6% and the dollar fell broadly.

Futures pointed to broad gains for Asia’s stock markets, which have been beaten down by war and soaring energy prices, and 10-year US Treasury futures jumped about 15 ticks.

The risk-sensitive Australian dollar rose more than 0.8% to above 70 US cents and the euro rose 0.4% to USD 1.1647. Cryptocurrencies also rose.

(Reporting by Tom Westbrook; Editing by Jamie Freed)

Hot money increasingly dominates emerging markets financing, raising risks, IMF says

LONDON – Emerging market nations now get the bulk of their foreign financing from the likes of hedge funds, pension funds and insurers, leaving them vulnerable to rapid outflows during crises, the International Monetary Fund said in a report.

The share of the cash flowing into emerging market debt from portfolio investors has doubled over the past 20 years to 80%, the report found, as banks backed away from lending following the 2008 financial crisis. Since then, emerging markets have received cumulative inflows of close to USD 4 trillion, according to the report.

In a chapter of its Global Financial Stability report released on Tuesday, the IMF said this source of money “significantly benefits emerging markets”, as ample global liquidity had allowed them to raise money with longer-term and lower-cost debt.

However, it also warned that portfolio investors had become even more skittish since 2008—and prone to pull their cash quickly when global financial conditions shift.

Countries and companies relying on them are “particularly vulnerable to global financial shocks”, the report said.

Hedge funds and investment funds were far more reactive to risk than other portfolio investors, it noted, and warned that the risks were amplified in emerging nations with shallower financial markets and more limited policy capacity.

“A sudden drop in these flows could intensify external financing pressures, widen corporate and sovereign spreads, and trigger sharp currency depreciations.”

The IMF estimated that external portfolio debt liabilities averaged about 15% of gross domestic product in emerging markets. Portfolio equity liabilities averaged around 7% of GDP, but “represent an economically meaningful share of stock market capitalization in some emerging markets.”

Foreign portfolio holdings are particularly large for the likes of Hungary’s forint currency, which propelled it to 20% gains against the US dollar last year.

The forint has wilted since the Iran war began in late February, with money flows into emerging markets falling after more than a year of stellar performance.

The IMF added that cross-border private credit and stablecoin flows into emerging markets were also “expanding rapidly“, with the latter closely tied to crypto market dynamics.

In order to limit the outflows of portfolio funds, the Fund urged countries to improve institutional quality, build better buffers such as foreign exchange reserves and ensure public debt remains sustainable.

(Reporting by Libby George; Editing by Dhara Ranasinghe and Janane Venkatraman)

Oil prices extend gains as Trump sharpens rhetoric on Iran

BENGALURU – Oil prices extended gains on Tuesday as US President Donald Trump heightened his rhetoric against Iran, threatening stronger action if the country fails to reopen the Strait of Hormuz, a key global oil transit chokepoint.

Brent crude futures rose 57 cents, or 0.5%, to USD 110.34 a barrel by 1202 GMT, while US West Texas Intermediate crude futures were up USD 1.26, or 1.1%, at USD 113.67.

Trump, has threatened to rain “hell” on Tehran if it fails to comply with his deadline of 8 p.m. EDT Tuesday to reopen the strait. “They could be taken out,” Trump warned, pledging further action if a deal is not reached.

Responding to a US proposal through mediator Pakistan, Tehran rejected a ceasefire and said a permanent end to the war was necessary, and pushed back against pressure to reopen the strait.

Iranian forces effectively shut the Strait of Hormuz after US and Israeli attacks began on February 28, disrupting a waterway that typically carries about 20% of global oil flows.

“Clock-watching is now playing almost as big a role in oil markets as the fundamentals themselves in the run-up to Trump’s ultimatum deadline,” said Tim Waterer, chief market analyst at KCM Trade.

“The potential for a ceasefire deal offers some counterweight and could spark a relief move lower if it gains traction, but persistent supply worries from the Hormuz chokepoint and damaged energy facilities are keeping the floor under prices.”

On Monday, Iran’s Revolutionary Guards halted two Qatar liquefied natural gas tankers and directed them to hold position without providing explanations, sources told Reuters. However, shipping data has shown limited vessel movement through the strait since last Thursday.

The UN Security Council is expected to vote on Tuesday on a resolution to protect commercial shipping in the Strait of Hormuz, but in significantly watered-down form after veto-wielding China opposed authorizing force, diplomats said.

The attack in the region continued as explosions were heard in the Syrian capital, Damascus, and surrounding countryside on Tuesday that were caused by the Israeli interception of Iranian missiles, Syrian state TV reported.

Saudi Arabia said on Tuesday it intercepted and destroyed seven ballistic missiles launched towards its Eastern Region, with debris falling near energy facilities, according to the defense ministry.

The conflict has pressured global crude markets, with spot premiums for US WTI crude surging to record highs as Asian and European refiners scramble to secure replacement supplies amid disrupted Middle Eastern flows.

Saudi Arabia’s state oil company Aramco raised the official selling price of its Arab Light crude to Asia for May delivery, setting a record premium of USD 19.50 a barrel above the Oman/Dubai average.

Adding to supply concerns, Russia on Monday said Ukrainian drones attacked the Caspian Pipeline Consortium’s terminal on the Black Sea, which handles 1.5% of global oil supply. Russia reported damage to loading infrastructure and storage tanks.

OPEC+ agreed on Sunday to lift oil output quotas by 206,000 bpd in May, though the increase will be largely notional as key members cannot boost production because strait closures are curbing exports.

(Reporting by Anmol Choubey in Bengaluru; Editing by Chris Reese and Cynthia Osterman)

Gold rises over 3%, but on track for worst month since 2008

Gold rose on Tuesday, but remained on track for its steepest monthly decline since October 2008, as persistent inflation worries and expectations of higher interest rates due to the impact of the Iran war weighed on the non-yielding metal.

Spot gold was up 3.2% to USD 4,652.31 per ounce by 1:31 p.m. EDT (1731 GMT), the highest level since March 20. US gold futures settled 2.7% higher at USD 4,678.60.

The US dollar slipped, but remained on course for a monthly gain. A stronger dollar makes greenback‑priced bullion more expensive for holders of other currencies.

“The current rally in gold is encouraging and is because of some increased optimism about de-escalation in the Middle East. But, I need to see more upside performance for it to be a continuation pattern,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

“In the long term, the underlying trend remains bullish, and key fundamental supports such as de‑dollarization and central bank buying are still in place.”

The Wall Street Journal reported, citing administration officials, that President Donald Trump was willing to end the military campaign against Iran even if the Strait of Hormuz remains largely closed. Meanwhile, US Defense Secretary Pete Hegseth said the next few days in the war against Iran would be decisive and warned Tehran that the conflict would intensify if it did not make a deal.

Spot gold is down 11.8% in March, as higher oil prices triggered by the war in the Middle East weigh on bullion. The energy price surge has intensified inflation concerns and prompted markets to reassess interest rate expectations. Despite being a hedge against uncertainty and inflation, high rates raise the opportunity cost of holding the metal.

BMI kept its 2026 gold forecast at an annual average of USD 4,600, while Goldman Sachs continues to forecast the gold price reaching USD 5,400 by the end of 2026.

Spot silver rose 6.7% to USD 74.64, but was down 20.4% for the month.

Analysts at BNP Paribas see silver trading in a range of USD 65 to USD 75 per ounce through 2026 and expect the physical market to shift into surplus by 2027.

Platinum gained 3.1% to USD 1,958.05, and palladium rose 5.2% to USD 1,479.25. Both metals were on track for monthly declines.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Paul Simao and Tasim Zahid)

US government bonds climb on hopes for war de‑escalation

NEW YORK – US Treasuries ended the first quarter higher on Tuesday, rebounding after a month of heavy selling and rallying in line with stocks, as a report suggesting possible de-escalation in the Middle East boosted demand for government debt.

Bond investors also shifted their focus to prospects for lower growth instead of inflation expectations if the conflict drags on, prompting investors to price in possible rate cuts this year.

In afternoon trading, the benchmark 10-year yield, which falls when Treasury prices rise, slipped 3.1 basis points to 4.321%, falling for a second straight session. For the month of March, however, 10-year yields surged 35 bps, putting them on track for their largest monthly rise since December 2024.

On the front end of the curve, US two-year yields, which reflect interest rate expectations, were down 3.3 bps at 3.795%. But for the month, two-year yields have climbed 42 bps, their biggest monthly increase since October 2024.

“The market has repriced, moving away from fears of higher interest rates,” said Joseph Abate, head of rates strategy at SMBC Nikko Securities in New York.

He noted that in the first few weeks of the war the rates market had priced in some tightening, but now has subsequently taken that out.

“Now, we’re priced in for a little bit of easing. I think that’s always been the more central case. The Fed tends to look through the inflation shock, and toward more demand destruction from higher oil and gasoline prices.”

MARKET BOLSTERED BY SIGNALS ON POSSIBLE HALT TO CONFLICT

Treasuries were also bolstered in part by a Wall Street Journal report on Tuesday that US President Donald Trump was willing to halt the military campaign against Iran despite a mostly closed Strait of Hormuz – a flashpoint for oil prices and global trade.

Trump had threatened on Monday to obliterate Iran’s energy plants if it did not agree to a peace deal and open the strait.

US Defense Secretary Pete Hegseth confirmed on Tuesday that talks to end the regional conflict are ongoing and gaining strength, but said the United States is prepared to continue the war if Iran does not comply.

Tom di Galoma, managing director for global rates trading at Mischler Financial, said Treasuries traded higher because “there’s a growing feeling that the US is backing off on taking over the Strait of Hormuz and that the Trump administration is trying to tone down the rhetoric on Iran.”

In other maturities, US 30-year yields dipped 1.7 bps to 4.889%. But on a monthly basis, the long bond yield has risen 26 bps, its largest increase since December 2024.

The yield curve also steepened on Tuesday, with the gap between two-year and 10-year yields widening to 53.6 bps, compared with 51.80 bps late on Monday. Tuesday’s spread was the largest since March 17. It was last at 51 bps.

The curve showed a bull-steepening pattern, in which yields on short-dated notes are falling faster than those on longer-term maturities, which is an indication that markets are again entertaining the possibility of interest rate cuts in 2026.

US rate futures on Tuesday priced in about 7 bps of easing, a turnaround from the 10 bps of hikes reflected on Monday, according to LSEG estimates.

SIGNS OF SLOWDOWN

US data on Tuesday showed signs of slowing growth, although Treasuries were largely unmoved by the data release as attention stayed squarely on the war and its potential endgame.

US job openings fell more than expected in February and hiring dropped to the lowest in nearly six years, data showed on Tuesday.

Job openings, a measure of labor demand, were down 358,000 at 6.882 million by the last day of February, the Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report.

Economists polled by Reuters had forecast 6.918 million unfilled jobs. The job openings rate dropped to 4.2% from January’s 4.4%.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Paul Simao and Edmund Klamann)

S&P 500 heads for worst quarter since 2022 as Iran war, rate worries rattle Wall Street

NEW YORK – The broad US equity index is closing out its worst quarter in four years, reflecting an investor retreat driven in large part by inflation fears, uncertainty over the Iran war, and concerns about the economic impact of artificial intelligence.

The benchmark S&P 500 is on track to drop about 7% in the first quarter of 2026, its worst since 2022, when markets were rattled by the Russia-Ukraine conflict and the after-effects of the pandemic. Among the noteworthy developments this time round: the surge in oil prices and a sharp pullback in the megacap technology stocks that led the post-COVID bull market.

Adding to investor jitters, US Treasury bond yields have risen in recent weeks following a placid spell earlier in the first quarter. Investors who entered the year focused on the prospect of interest-rate cuts are now on the fence about whether they may see a more hawkish stance from the Federal Reserve, thanks to higher energy prices.

The yield on the US 10-year notes fell 10.4 basis points to 4.336% on Monday after last week approaching 4.50% for the first time in 2026, and exchange-traded funds tracking long-term US Treasury debt are down around 1% for the year.

“The setup this year has been one where there’ve been increasing questions around what the rate cycle could be,” said Matt Orton, chief market strategist at Raymond James. “Inflation has been a headwind, more so than it has been over the past few years, in terms of wondering what the read-through would be from increased energy prices both in the US and the global economy.”

Investor nerves over potential AI-driven disruption of software firms and heavy spending on AI infrastructure have contributed to the significant pullback in leading technology companies so far this year.

All the so-called Magnificent Seven companies – Nvidia, Apple, Alphabet, Meta, Microsoft, Amazon, and Tesla – are down for the quarter, with the declines in Microsoft and Tesla on track to exceed 20%.

“We had the AI-disruption narrative start and impact the Mag-7 stocks and have that spread to financial and cybersecurity stocks,” said Chris Galipeau, senior market strategist from the Franklin Templeton Institute. “Software stocks were the epicenter of that. It started the unwind in big tech, which is where the pressure point is.”

Private-credit market jitters have spilled into equities as well, with some major funds capping withdrawals that to some observers echoed ever so slightly the early days of the 2008 financial crisis.

“Prior to the war, the two issues in the market were really the AI disruption and private credit,” said James Ragan, co-chief investment officer and director of investment management research at D.A. Davidson. “Venture capital industries have the most exposure and banks have exposure we don’t understand yet. And the feeling is there’s going to be some losses in those credit markets.”

The tariff policies of US President Donald Trump’s administration against major trading partners have been a major source of market volatility as well, said Bill Strazzullo, chief market strategist at Bell Curve Trading in Boston.

“We’re in the process of putting in a major top and in the early innings of this. You shouldn’t be thinking about where to buy. You should be playing defense to protect profits,” Strazzullo said.

(Reporting by Chibuike Oguh in New York, editing by Colin Barr)

Treasury market’s next test: rising war costs

Inflation risks have driven Treasury yields higher since the US clash with Iran ignited energy prices. Now another threat to bond market health is coming into view: the cost of an extended conflict.

Wall Street continues to expect the war to end soon, easing pressure on both the price of oil and the US purse. Even so, some analysts are totting up the tab for extended war-related defense spending, tariff refunds, and a potential stimulus should the economy slow sharply. They say it could become an issue for markets that have recently become less friendly to bonds, with the S&P US Aggregate Bond Index returning -0.6% so far in the first quarter.

BNP Paribas, for instance, expects the US deficit to stay just below 6% of GDP over 2026 and 2027. Factor in the added costs, however, and “you get from a deficit that’s just below 6% to something that could easily be closer to 8% or even a bit above,” said senior economist Andrew Husby. That isn’t a trend bond investors want to see.

SIGNS OF INFLATION STRESS

The most intense bond market selling has so far been concentrated in short-term yields, reflecting fading hopes for near-term Federal Reserve rate cuts. But longer-dated yields have also climbed, with the 10-year Treasury briefly nearing 4.5% for the first time since last summer and some Treasury auctions this month drawing weak demand.

“All of these little costs seem to be adding up,” said Bill Campbell, a portfolio manager at DoubleLine Capital.

The US fiscal position was already stretched before the first US strike on Iran on February 28. The national debt has reached a record USD 39 trillion, and annual net interest payments are expected to reach USD 1 trillion this fiscal year.

The Pentagon is seeking more than USD 200 billion in supplemental funding from Congress for the Iran war, which is on top of the roughly USD 900 billion defense bill already signed for fiscal year 2026.

The government’s revenue position also took a hit after the Supreme Court ruled that the president cannot use emergency powers to impose tariffs, potentially requiring around USD 175 billion in refunds to importers. The administration has said it will impose replacement tariffs under separate legal authority, though it is unclear whether these will fully make up the lost revenue.

NOT LEADING MOVES SO FAR

Markets so far aren’t expecting large shifts in the US fiscal outlook.

BNP’s Husby said markets may simply wait for actual legislation to take shape before reacting more forcefully. “There’s not a ton of extra fiscal risk really being priced right now,” he said.

Dirk Willer, head of macro and asset allocation strategy at Citigroup, said the biggest risk is that the Federal Reserve won’t be able to cut rates due to inflation, while fiscal expenditures are rising and the Fed is potentially looking to cut the size of its balance sheet.

Then, “you could see again the fiscal voice coming back to a larger extent.”

FIRST THINGS FIRST

Nearer-term threats may be a Fed rate increase and rising geopolitical risk.

Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, warned that “the other shoe to drop would occur if and as growth continues and inflation stays high and it turns out the US is going to have a hiking bias or hike rates this year.”

Christian Hoffmann, head of fixed income at Thornburg Investment Management, says years of geopolitical shocks that ultimately proved manageable have trained investors to underreact — a pattern that will likely hold until something breaks it. “We might be at the cusp of that right now,” he said.

If longer-dated yields do continue to rise, the Treasury’s most likely response would be to alter its issuance strategy. Campbell of DoubleLine said a 30-year yield of 5.25%, up from a recent 4.95%, “would be a big problem” and could prompt the government to cut long-dated issuance in favor of short-term bills.

Mike Cudzil, a portfolio manager at PIMCO, sees the oil shock eventually slowing growth, forestalling rate hikes and potentially allowing the Fed to cut later this year — sending yields lower. PIMCO has been adding longer-dated debt across developed markets on that basis.

(Reporting by Karen Brettell; additional reporting by Vidya Ranganathan; editing by Colin Barr and Anna Driver)

Yields rise further as uncertainty persists around Iran conflict

WASHINGTON – US Treasury yields rose further on Thursday as ongoing Middle East tensions drove investor concerns about higher oil prices and persistent inflation.

The benchmark US 10-year Treasury yield on Thursday was last up 7.8 basis points at 4.404%. The two-year note’s yield was last up 8.6 bps at 3.967%.

Investors have weighed the impact of a continued back-and-forth between the US and Iran this week. It has sent mixed signals about the possibility of a conclusion to the war in Iran that began at the end of last month with coordinated attacks by the US and Israel.

US President Donald Trump on social media has this week repeatedly claimed progress in peace talks with Tehran. But Iran’s foreign minister told Reuters that messages exchanged between the two countries “does not mean negotiations with the US”.

During a Thursday Cabinet meeting, Trump cast doubt on the prospect of a peace deal. “In the meantime, we’ll just keep blowing them away,” he said.

AIRSTRIKES ARE EXPECTED OVER THE COMING DAYS

Continued airstrikes and the landing of US ground troops are reportedly expected in the region in the coming days as Iran has refused to reopen the Strait of Hormuz, which is the route for much of the world’s oil supply.

“Mideast tensions have bond yields rising due to higher oil prices, where Brent crude is at USD 106, up USD 4 overnight,” wrote Tom di Galoma, managing director of global rates trading at broker-dealer Mischler Financial Group, in a note on Thursday.

“Yields rose during the APAC and EMEA sessions as banks and money managers liquidate bond holdings ahead of this weekend’s airstrikes.”

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, viewed in the markets as an indicator of economic expectations, was last at 43.64 basis points.

Elevated oil prices have raised concerns of persistent inflation, with US rate futures beginning last week to price in the possibility of an interest-rate hike later this year. Markets last priced in a 95.9% chance of no hike for the Fed’s April meeting and a 32.6% chance of a hike by the end of the year.

Data on Thursday showed new US jobless claims rose slightly last week to a seasonally adjusted 210,000, which was in line with economists’ forecasts.

The Treasury Department on Thursday auctioned USD 44 billion in seven-year notes to tepid demand. Its 2.43x bid-to-cover ratio, a key indicator of demand, was slightly below the 2.5x average for similar auctions. Seven-year yields rose following the auction and were last up 10.7 bps at 4.253%.

The auction follows earlier sales this week of two- and five-year notes that met soft demand.

“I think the auction results…definitely contributed to the selling pressure that was already associated with the jump in oil prices,” said Vail Hartman, US rates strategist at BMO Capital Markets.

“So the auctions were just a compounding factor for the sell-off associated with geopolitics.”

(Matt Tracy in Washington; editing by Barbara Lewis and Hugh Lawson)

Nasdaq confirms correction, bond prices fall as Iran crisis pushes oil to $108

NEW YORK/LONDON – Stock indexes fell sharply on Thursday, with the Nasdaq dropping more than 2% to confirm a correction, and Brent oil jumped to more than USD 105 a barrel as hopes diminished for a quick resolution to the nearly one-month-old Middle East war.

US President Donald Trump said Iran must make a deal or face a continued onslaught, while a senior Iranian official told Reuters on Thursday that a US proposal for ending the fighting is “one-sided and unfair.”

Global debt markets also sold off, pushing yields higher, while safe-haven buying boosted the US dollar.

On Wall Street, the Nasdaq Composite dropped 2.4%, leaving the tech-heavy index down nearly 11% from its record-high close on October 29 and confirming it has been in a correction – typically defined as a fall of 10% to 20% – since then. The day also marked the biggest one-day decline for the Nasdaq and the S&P 500 since January 20.

Stock futures trimmed losses after the bell as Trump said he was pausing attacks on Iran’s energy plants for 10 days until April 6 at the Iranian government’s request.

“This war has really been punishing investor psyches,” said Ryan Detrick, chief market strategist at Carson Group. The move in the Nasdaq “is further confirmation that the weakness we’ve been seeing across the board continues.”

Prospects of a prolonged war in the Middle East fanned worries about energy supply disruptions. Oil and European natural gas rose, with Brent futures settling at USD 108.01 a barrel, up USD 5.79. US crude settled at USD 94.48.

The war, triggered by US–Israeli strikes on Iran, has rattled global markets and effectively shut the Strait of Hormuz, a conduit for a fifth of global oil and liquefied natural gas flows.

“Unfortunately, we’re in a market that’s being driven by oil prices. The rhetoric back and forth is continuing, and until talks begin, the market is going to be subject to the price of oil,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

The Dow Jones Industrial Average fell 469.38 points, or 1.01%, to 45,960.11, the S&P 500 fell 114.74 points, or 1.74%, to 6,477.16 and the Nasdaq Composite fell 521.74 points, or 2.38%, to 21,408.08.

MSCI’s gauge of stocks across the globe fell 15.90 points, or 1.60%, to 979.56.
The pan-European STOXX 600 index fell 1.13%.

The Philippines held an unscheduled central bank meeting due to the turmoil, while Germany’s central bank head said a European Central Bank rate hike next month was “an option.” Germany’s two-year bond yield, sensitive to ECB rate expectations, rose. Bond yields move inversely to prices.

Worries about persistent inflation also drove US Treasury yields higher. The benchmark US 10-year Treasury yield was last up 7.8 basis points at 4.404%. The two-year note’s yield was last up 8.6 bps at 3.967%.

Earlier, the yield on Japan’s two-year government bond hit its highest level in 30 years at 1.33%, as traders cemented bets on another Bank of Japan rate hike as early as next month. JP/

In currencies, the US dollar rose against most major currencies, reviving its safe-haven appeal.

Fears of a 2022-style inflation shock have seen traders fully price out any chance of a Federal Reserve rate cut this year, further supporting the dollar.

In afternoon trading, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.3% to 99.92, with the euro down 0.24% at USD 1.1529. Against the Japanese yen, the dollar strengthened 0.19% to 159.75.

Gold fell. US gold futures for April delivery settled 3.9% lower at USD 4,376.30.

(Reporting by Caroline Valetkevitch in New York and Marc Jones in London; additional reporting by Stephen Culp in New York; editing by Mark Potter, Will Dunham, Arun Koyyur, and Lincoln Feast)

Gold falls as markets assess prospects of Iran ceasefire

Gold prices retreated on Thursday, hurt by a firmer dollar and higher oil prices that kept inflation fears intact and sustained expectations of elevated interest rates, while market participants reconsidered the chances of a Middle East ceasefire.

Spot gold was down 2.7% at USD 4,384.38 per ounce by 1:30 p.m. ET (1730 GMT). US gold futures for April delivery settled 3.9% lower at USD 4,376.3.

The US dollar nudged higher, making greenback-priced bullion more expensive for other currency holders.

Gold is weighed down by concerns over higher interest rates and inflation, said Jim Wyckoff, senior analyst at Kitco Metals.

“If the conflict continues, prices could dip below USD 4,000, while a ceasefire and renewed rate-cut hopes could lift them back toward USD 5,000,” he said.

Despite being a hedge against uncertainty and inflation, gold often loses appeal in a higher rate environment as rising yields raise the opportunity cost of holding the metal.

Oil rose as prospects for a prolonged conflict in the Middle East stoked concerns over further supply disruptions. Higher energy prices could exacerbate inflationary pressures across economies.

A US proposal for ending nearly four weeks of fighting is “one-sided and unfair”, a senior Iranian official told Reuters.

Meanwhile, US President Donald Trump said Iran was letting 10 oil tankers transit the Strait of Hormuz as an apparent goodwill gesture in negotiations.

Gold prices have fallen 17% since the US-Israeli war on Iran began on February 28.

“Speculative movements in recent quarters have compromised the ability of gold and silver to effectively serve as safe-haven assets, at least in the short term. The quest for liquidity has fuelled sales of both metals in the first weeks of the conflict,” said analysts at Intesa Sanpaolo in a quarterly note.

Elsewhere, data showed that new applications for US unemployment benefits rose slightly last week, suggesting the labor market remains stable and giving the Federal Reserve scope to hold interest rates steady while monitoring inflation risks linked to the war.

Among other metals, spot silver fell 5% to USD 67.71, platinum was down 4.2% at USD 1,839.67, and palladium shed 5% to USD 1,352.82.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Nia Williams and Devika Syamnath)

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