Gold edges lower below $4,750 amid fragile Middle East ceasefire

• Gold price posts modest gains near $4,720 in Thursday’s early Asian session. 

• Two-week ceasefire fails to halt Israel-Hezbollah fighting. 

• Fed officials still expect a rate cut this year despite war impacts, FOMC Minutes showed.

Gold price (XAU/USD) trades in negative territory around $4,705 during the early Asian session on Thursday. The precious metal edges lower amid a temporary two-week ceasefire between the US and Iran.   

US President Donald Trump said late Tuesday that he had agreed "to suspend the bombing and attack of Iran for a period of two weeks” on the condition that Iran re-opens the Strait of Hormuz. 

“The ceasefire is calming markets and easing pressure. It could help roll back some inflationary pressures and might open the door for Fed rate cuts, which is bullish for gold,” said Edward Meir, a Marex analyst.

The recovery of yellow metal could be short-term as sporadic fighting continued in the Middle East, including in Lebanon. Iranian officials cast that as violating the terms of the less than day-old ceasefire.

Gold faced some selling pressure in recent weeks amid worries that surging oil prices from the Middle East conflict would create inflationary pressures and prevent central banks from cutting interest rates. Gold is often used amid geopolitical uncertainty, but it does not yield interest, making it less attractive when interest rates are high.

According to minutes released Wednesday, Fed officials at their March meeting still expected to lower interest rates this year, even with a high level of uncertainty from the Iran war and tariffs. Policymakers stated that they would need to remain “nimble” as they weighed the impact the war had on inflation, which continued to hold above the Fed’s target, and hiring, which has been mostly flat over the past year.