Gold Rebounds to Gain $5 in April, Mirrors Oil Plunge as Fed Splits on 'Easing'

GOLD PRICES trimmed a sharp rally Thursday as crude oil bounced after plunging from new 4-year highs, helping long-term borrowing costs retreat despite growing expectations that the US Federal Reserve will stay higher for longer, if not start raising interest rates.

With Brent crude down more than 11.1% in 12 hours from midnight's peak above $120 per barrel, the price of gold rallied to $4644 per Troy ounce, regaining nearly 3.0% from yesterday's new 4-week lows.

Gold prices then fell back to $4611 − and silver briefly gave back almost $1 of today's $3 rebound to $73.90 per Troy ounce − as Brent futures recovered to $110.

Gold's rebound today put it $5 higher for the month of April after the Iran War plunge of March snapped a record 9-month run of rising Dollar prices with the worst drop since the spring 2013 gold crash ended that June, costing investors 11.8% last month.

"Still in la la land," says the front of this week's Economist magazine across an image of an oil tanker, explaining "Why oil prices are not yet high enough."

"Oh dear," says Bloomberg energy analyst Javier Blas, citing "the curse" of The Economist, where its cover story is often seen to signal a sharp reversal in the market or trend it examines.

"I think it's at risk," said US central bank chairman Jerome Powell meantime on Wednesday when asked about Fed independence after holding the Dollar's key interest rate unchanged for the 4th month running.

"The institution is being battered by [Trump's] legal assaults," Powell said, vowing to stay on as a Fed governor when his term as chair ends in May − most likely to be replaced by Trump's new pick Kevin Warsh.

"I had long planned to be retiring [but] the things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through."

Trump's economic advisor Stephen Miran was yet again the lone voter for cutting interest rates yesterday, but 3 other Fed members also dissented, backing the decision to hold rates unchanged but voting against "inclusion of an easing bias in the statement at this time."

With crude oil prices running above $100 per barrel, "There's far too much economic uncertainty to take out the easing bias," notes gold analyst Rhona O'Connell at brokerage StoneX, adding however that "Rate cuts [remain] on a far distant horizon."

Betting summarized by the CME derivatives exchange's FedWatch tool today said that traders' consensus now sees no rate cuts before December 2027, with the futures market now putting a 1-in-4 shot on the Fed actually raising the cost of borrowing in March or April next year.

On the eve of the Iran War crushing gold prices starting 2 months ago today, London bullion traded at $5222 as the CME's FedWatch predicted that the US central bank would resume cutting interest rates this June.

The Iran War has so far cost the US government $25 billion, according to a Pentagon official.

"The bright future of the Persian Gulf region will be a future without America," said a defiant statement Thursday from Iran's Supreme Leader Mojtaba Khamenei, marking National Persian Gulf Day, which commemorates a 1622 battle when English ships from the East India Company helped troops from the Safavid dynasty expel Portugal from controlling the Strait of Hormuz.

"Foreigners who, from thousands of kilometers away, greedily commit atrocities within it, have no place in it except at the bottom of its waters."