Spot gold prices fell sharply on Wednesday, with analysts attributing the decline partly to profit-taking by investors. Additionally, rising stock markets reduced safe-haven demand, while higher U.S. Treasury yields also contributed to the downward pressure on gold. Investors continued to assess the latest developments between the U.S. and Iran and their implications for interest rate expectations.

FXStreet analyst Christian Borjon Valencia noted that gold prices dropped below $4,800 per ounce on Wednesday as improved risk appetite weakened demand for safe-haven assets. Valencia stated that expectations of progress in U.S.-Iran relations led to lower gold prices, with reduced demand putting pressure on the precious metal. Strengthening U.S. Treasury yields and firm equity markets added further downward pressure on gold.

Spot gold closed down $51.06, or 1.1%, at $4,790.57 per ounce on Wednesday. Earlier in the session, gold had reached its highest level since March 18.

Jim Wyckoff, senior analyst at Kitco Metals, said on Wednesday, "Gold and silver are experiencing some mild and routine profit-taking after climbing to highs earlier in the session." He added, "Recently, gold has risen when risk appetite improves and fallen when safe-haven sentiment strengthens, which deviates from gold's traditional role as a safe-haven asset. Traders are now more focused on the impacts of monetary policy tightening and inflationary pressures."

U.S. President Donald Trump stated that the war he launched against Iran alongside Israel is nearing its end. Meanwhile, Pakistan's Army Chief arrived in Tehran as a mediator, attempting to prevent the conflict from escalating again.

Valencia wrote that improved risk appetite led to funds flowing into U.S. stocks, pushing the S&P 500 above the 7,000 mark and testing its all-time high near 7,014. Gold prices fell 1% on Wednesday.

The U.S. dollar index (DXY), which measures the dollar against a basket of six currencies, fell 0.06% to 98.05, slightly above its six-week low of 97.96. Meanwhile, the yield on the 10-year U.S. Treasury note rose 3 basis points to 4.275%, negatively impacting precious metal prices due to market expectations that the Federal Reserve will not cut interest rates this year.

Significant developments emerged in the U.S.-Iran situation. As negotiations between the U.S. and Iran continued, signs of easing tensions were reported in the Strait of Hormuz, a critical global energy transport chokepoint. Reuters reported on Wednesday, citing informed sources, that Iran is considering allowing vessels to pass freely through the Omani side of the Strait of Hormuz without threat of attack, provided an agreement is reached to prevent further escalation of conflict.

According to the report, since the war began, hundreds of oil tankers and other vessels, along with approximately 20,000 sailors, have been trapped in the Gulf region, with overall shipping traffic reduced to a fraction of pre-war levels.

Although a two-week ceasefire began on April 8 and President Trump stated on Wednesday that the war is "nearing its end," control and navigation of the Strait of Hormuz remain key obstacles in the U.S.-Iran negotiations.

Informed sources revealed that Iran has proposed a new idea in negotiations with the U.S.: if an agreement to avoid reigniting conflict can be reached, Tehran would consider allowing vessels to sail freely through the Omani waters side of the Strait of Hormuz and would not attack these vessels. This proposal is seen as the first clear signal of easing tensions from Iran on the Hormuz issue. In recent weeks, Iran had proposed more confrontational ideas, including imposing tolls on vessels passing through the strait and even attempting to assert sovereign control over the international waterway. This latest proposal to allow safe passage through certain routes suggests Tehran's negotiating stance may be shifting from hardline pressure toward pragmatic compromise.

President Trump stated on Wednesday that the war with Iran is "nearing its end," during an interview with Fox News reporter Maria Bartiromo. When asked directly if the war was over, Trump said it was approaching its conclusion. "I think it (the Iran conflict) is nearing its end, yes," he said. "I think it's very close to being over."

On the evening of April 7 Eastern Time, the U.S. and Iran announced a ceasefire and began two weeks of negotiations. Israeli Prime Minister Benjamin Netanyahu's office subsequently issued a statement supporting the ceasefire but excluding Lebanon. The U.S. and Iran began talks on April 11, but no agreement was reached by the time negotiations concluded on April 12.

According to the New York Post, President Trump said on Tuesday that talks with Iran "could take place within the next two days" in Pakistan. Previous talks held in Pakistan over the weekend yielded no results. Iran's Press TV reported on Tuesday that Iranian and U.S. delegations might resume negotiations later this week in Islamabad, Pakistan's capital.

Bloomberg reported, citing informed sources, that the goal is to hold more talks before the April 7 ceasefire agreement expires next week. One proposal is to return to Pakistan to continue negotiations, though other locations are also under consideration.

Regarding the Federal Reserve's interest rate outlook, Chicago Fed President Austan Goolsbee said on Tuesday that if the Iran war leads to persistently high oil prices and delays the return of inflation to the 2% target, the Fed might not cut interest rates until 2027. Market expectations currently price in a 32% chance of a Fed rate cut this year. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold, reducing its appeal as an inflation hedge and putting pressure on gold prices.

From a technical analysis perspective, FXStreet analyst Christian Borjon Valencia noted that gold's upward trend remains intact, but after hitting a high near $4,871 per ounce, it failed to break the next key resistance level at $4,899. Resistance from the 50-day Simple Moving Average (SMA) caused prices to pull back.

After hitting a four-week high earlier in the session, gold's momentum remained positive. However, with the closing price below $4,800, a decline toward the April 14 low of $4,742 is possible. The Relative Strength Index (RSI) indicates that gold's momentum remains bullish but is vulnerable as it approaches neutral levels.

Valencia stated that for the upward trend to continue, gold needs to decisively break above $4,850. Key resistance levels are at the 50-day SMA around $4,899, followed by $4,950 and $5,000. Conversely, the first key support level is at $4,750, followed by the April 14 intraday low, then testing $4,700. A break below $4,700 would expose the convergence point of the 100-day and 20-day SMAs near $4,684 and $4,640, respectively.