Signals of renewed peace talks between the United States and Iran have eased market concerns over persistently worsening inflation. International gold prices edged higher after two consecutive days of declines, while crude oil prices retreated from recent peaks. However, the ongoing U.S. naval blockade of the Strait of Hormuz continues, with traders remaining cautious due to the dual uncertainties of geopolitics and the economic outlook.

Gold prices halted their decline and rebounded, with interest rate expectations driving the market. In early Asian trading on Tuesday, spot gold rose 0.64% to $4,770.54 per ounce, partially recovering from a cumulative 0.6% drop over the previous two sessions. Silver inched up 0.2% to $75.73, while platinum and palladium also strengthened. The Bloomberg Dollar Spot Index dipped 0.1%, providing support for dollar-denominated gold.

The stabilization in gold was largely buoyed by news suggesting potential resumed diplomatic contact between the U.S. and Iran. The U.S. President indicated that Iranian officials had contacted American counterparts through "appropriate channels" expressing a willingness to "reach an agreement." The Iranian President also stated publicly that Tehran is prepared to continue peace negotiations within the framework of international law.

Consequently, U.S. stocks rallied on Monday, energy prices faced pressure, and inflation expectations cooled somewhat. However, analysts noted that current gold price movements are more influenced by interest rate expectations rather than acting purely as a geopolitical hedge. An investment strategist commented, "Gold is benefiting, alongside equities, from expectations that tensions may ease." He added that while short-term inflation concerns are weighing on gold, historically, a scenario where persistently high oil prices lead to slower economic growth has ultimately been favorable for the metal.

It is noteworthy that gold has fallen approximately 10% since the conflict between the U.S. and Iran escalated in late February. Initially, liquidity-driven selling to cover losses in other positions caused investors to offload gold, and the market has not fully recovered since. Currently, U.S. money markets are pricing in less than a 20% probability of a Federal Reserve rate cut by year-end.

Oil prices retreated from highs, with the Hormuz impasse pressuring the real economy. The oil market also reacted sensitively to the negotiation news. Brent crude fell towards $97 per barrel, while West Texas Intermediate (WTI) hovered near $96. According to informed sources, both sides are discussing further consultations aimed at achieving a longer-term ceasefire before the expiry of the two-week truce agreement reached on April 7.

However, diplomatic warmth has not resolved the physical blockade crisis. The U.S. Navy's interception of vessels bound for Iranian ports via the Strait of Hormuz marks a further escalation of tensions. Although three tankers successfully transited the waterway on Monday, shipping activity has again contracted sharply.

An analyst highlighted that the prospect of renewed talks helps "contain sharp swings in Brent and WTI futures," but "even if diplomatic signals keep benchmark prices below $100, underlying supply tightness is intensifying." He stressed that as long as the flow of goods through the Strait of Hormuz remains constrained, real-economy fuel prices will continue to face upward pressure.

Indeed, U.S. retail gasoline and diesel prices have surged this month to their highest levels since 2022, while European jet fuel and diesel prices are approaching historical highs above $200 per barrel. The U.S. Vice President acknowledged that soaring gasoline prices are causing pain for American consumers. However, he stated that the blockade on Iranian oil strengthens the U.S. negotiating position, suggesting in an interview that "we can begin winding this down."

The International Energy Agency (IEA) is scheduled to release its monthly market report later on Tuesday, which will provide a fresh perspective on supply and demand dynamics. The IEA's chief warned on Monday that current oil prices do not yet fully reflect the severity of the supply crisis, but "they soon will."

The outlook remains uncertain. Although diplomatic contact offers a brief respite for markets, analysts remain cautious about the future. A senior fellow pointed out that U.S. naval actions will increase economic pressure on Iran, but "Iran is not the only party bearing economic consequences; the blockade will also exacerbate energy price pressures and inflict greater damage on the global economy."

Data released by OPEC on Monday showed the group's crude production recorded a record monthly plunge last month, as conflict disrupted exports from major producers, forcing significant production shutdowns across the Middle East.