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Gold caught a bid on Wednesday after US and Iranian negotiators reached a tentative deal to extend their ceasefire by another 60 days. Spot prices rose 1.1% to roughly $4,504 per ounce, while US gold futures settled at $4,532.40.
Here’s the thing, though: zoom out just slightly and the picture looks less rosy. Gold is still on track for a 2.3% decline in May, a monthly retreat that underscores how shifting geopolitical currents can simultaneously lift and weigh on the same asset.
What happened with the ceasefire
On May 28, negotiators from both sides agreed to a memorandum of understanding that does more than just pause hostilities. The deal includes provisions for renewed discussions over Iran’s nuclear program and, critically, the reopening of the Strait of Hormuz to commercial shipping.
The extension follows an initial truce declared on April 8, which had been tested repeatedly by intermittent violations on both sides.
Oil markets responded accordingly. Brent crude is on track for what could be a 19% monthly decline, which would make it the largest single-month drop since 2020.
Why gold is still down for the month
Gold’s 2.3% retreat in May reflects a broader recalibration across markets as geopolitical tensions have gradually eased from their peak. When the initial truce was announced in April, gold was already elevated from months of conflict-driven demand. Each subsequent sign of de-escalation has chipped away at that premium.
There’s also the oil connection. Falling crude prices have eased inflation concerns tied to energy costs, reducing the urgency of holding inflation hedges like gold.
What this means for crypto and risk assets
Bitcoin rallied on ceasefire optimism back in April, pushing above $72,000 as traders rotated into risk assets on the back of easing tensions. The pattern has been consistent throughout the conflict: periods of escalation drove flight-to-safety flows into gold and stablecoins, while de-escalation windows opened the door for risk-on positioning in crypto and equities.
Tokenized gold products also saw notable interest during peak volatility, as investors looked for ways to access gold’s safe-haven properties through crypto-native infrastructure.
The 60-day extension is exactly that: a temporary arrangement. The nuclear discussions are preliminary, the Strait of Hormuz reopening comes with conditions, and the initial April truce was violated multiple times before this follow-up deal materialized.
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