Gold benefits from easing inflation fears
Nikos Kavalis, managing director of Metals Focus in Singapore, explained that the easing of concerns about inflation has brought gold back into focus as a hedge and safe haven in the markets.
He added that the outlook for gold remains positive from current levels, given the continued uncertainty in global markets.
This came as military escalation continued, with the United States and Israel launching intensive airstrikes on Iran, which the Pentagon and Iranian officials described as the most violent since the outbreak of the war.
Energy disturbances support the precious metal
The conflict has disrupted shipping through the Strait of Hormuz, a key transit point for about one-fifth of the world’s oil and liquefied natural gas supplies.
This de facto shutdown left oil tankers stranded for more than a week, and producers were forced to reduce production as storage facilities filled up, which drove energy prices sharply higher in the past period.
In light of these developments, gold has strengthened its gains, achieving an increase of more than 20% since the beginning of the year, recording consecutive record levels as a result of escalating geopolitical and economic risks.
Expectations of further price increases
Cavallis predicted that gold prices would reach levels exceeding $6,000 per ounce during the third or fourth quarter of this year, with the possibility of recording even higher levels at the beginning of next year.
These expectations reflect growing bets on gold continuing its role as a safe haven amid global tensions and financial market volatility.
Meanwhile, investors are awaiting the release of US consumer price index data for February later today, along with the personal consumption expenditures index on Friday, the Federal Reserve's preferred measure of inflation.
Market forecasts indicate that the Federal Reserve may keep interest rates unchanged at the end of its two-day meeting ending on March 18, but investors still expect at least two interest rate cuts this year, according to data from the US Interest Rate Monitor available on Investing Saudi Arabia’s website.
Gold at settlement yesterday
Gold prices rose at the close of trading on Tuesday, supported by a decline in the dollar index and easing inflation concerns as oil prices fell, amid US hints that the conflict in the Middle East might end soon.
Gold futures for April delivery rose 2.71%, or $138.40, to $5,242.10 an ounce.
Gold now
Gold in spot trading rose 0.1% to $5,198.29 an ounce at 9:40 a.m. Riyadh time.
In contrast, US gold futures for April delivery fell by 0.7% to $5,206.40.
Other minerals
In other metals markets, silver fell 0.8% to $87.74 an ounce, and platinum dropped 0.6% to $2,188.27.
In contrast, palladium rose 0.5% to $1,663.39 an ounce, in moves reflecting continued volatility in both the industrial and precious metals markets.
