Gold Prices Rebound in Asia After Heavy March Losses
Gold prices moved higher in Asian trading on Tuesday, recovering slightly after recording significant losses throughout March. The decline in recent weeks was largely driven by rising inflation expectations linked to the U.S.-Israel conflict with Iran, which pressured non-yielding assets such as precious metals.
De-Escalation Hopes Provide Support to Gold
Market sentiment improved after reports suggested that U.S. President Donald Trump is considering ending military operations in Iran, as the conflict risks extending beyond the initially expected four-to-six week period.
Additional support came from Federal Reserve Chair Jerome Powell, who indicated that long-term inflation expectations remain stable despite short-term economic shocks.
Gold, Silver and Platinum Move Higher
Spot gold rose 1% to $5,556.54 per ounce, while gold futures gained 0.6% to $4,587.01 per ounce.
Other precious metals also advanced. Silver surged 2.7% to $71.98 per ounce, while platinum climbed 0.8% to $1,914.85 per ounce. Despite these gains, both metals remain on track for notable losses in March.
Trump Considers Ending Iran War Without Reopening Hormuz
According to a report from the Wall Street Journal, Trump has informed aides that he is willing to end the military campaign against Iran even if the Strait of Hormuz remains closed.
Officials believe that reopening the strategic passage would prolong the conflict and require a more complex military operation. As a result, the U.S. may opt to wind down hostilities after achieving key objectives, including weakening Iran’s naval forces and missile capabilities.
Washington is then expected to pursue diplomatic efforts to pressure Tehran into reopening the strait, potentially with support from European and Gulf allies.
Hormuz Closure Keeps Inflation Risks Elevated
While the report has raised hopes for de-escalation, the continued closure of the Strait of Hormuz remains a major concern. The passage is responsible for around 20% of global oil supply, and its disruption is likely to keep energy prices elevated.
Higher energy costs continue to fuel inflation concerns, creating a challenging environment for gold and other non-yielding assets.
Gold Heads for Worst Monthly Performance in 17 Years
Despite the recent rebound, gold is on track for its worst monthly performance in nearly two decades. Spot gold has fallen approximately 14% in March, ending a seven-month streak of gains.
The decline has been driven by reduced expectations of interest rate cuts by the Federal Reserve, as well as rising oil prices linked to the Iran conflict.
Rising Interest Rates Pressure Precious Metals
Several major central banks, including the European Central Bank and the Bank of Japan, have signaled the possibility of further rate hikes to combat inflation driven by energy prices.
Higher interest rates increase bond yields, reducing the appeal of non-yielding assets like gold. As a result, other precious metals have also suffered steep losses this month, with silver down 23% and platinum declining around 19%.
