Gold Prices Edge Higher but Face Heavy March Losses
Gold prices rose slightly on Tuesday, but the metal remains on track for significant losses in March. Rising inflation expectations, driven by the ongoing conflict between the U.S., Israel, and Iran, have weighed heavily on non-yielding assets such as precious metals.
Spot Gold and Futures Performance
Spot gold climbed 1.4% to $4,575.84 per ounce, while gold futures gained 1.1% to $4,607.26. Despite this short-term rebound, gold has declined by more than 13% over the past month, reflecting sustained selling pressure.
Hopes of De-Escalation Offer Support
Markets found some relief after reports suggested that Donald Trump may consider ending military operations in Iran. The move could come as the conflict risks extending beyond the initially expected four- to six-week timeline.
U.S. officials reportedly believe that reopening the Strait of Hormuz would require a prolonged and complex military effort. Instead, Washington may shift toward diplomacy after achieving key objectives, including weakening Iran’s naval and missile capabilities.
Strait of Hormuz Remains Key Risk Factor
Even if tensions ease, the continued disruption of the Strait of Hormuz remains a major concern. The strategic waterway accounts for roughly 20% of global oil supply, meaning any prolonged closure could keep energy prices elevated and inflation pressures intact.
Fed Signals Help Stabilize Sentiment
Additional support for gold came from Jerome Powell, who indicated that long-term inflation expectations remain stable despite short-term shocks. This helped ease some pressure on precious metals markets.
Other Precious Metals See Gains
Other metals also moved higher. Spot silver surged 4.0% to $72.87 per ounce, while platinum rose 1.2% to $1,923.31. However, both metals remain on track for steep monthly losses.
Worst Month for Gold in Years
Despite the recent rebound, gold is heading for its weakest monthly performance in nearly two decades. Prices are down close to 14% in March, marking the end of a seven-month winning streak.
Rising Yields Weigh on Precious Metals
The decline in gold has been driven largely by shifting expectations around interest rates. Higher oil prices have fueled inflation concerns, reducing the likelihood of Federal Reserve rate cuts.
At the same time, central banks such as the European Central Bank and the Bank of Japan have signaled potential rate hikes, pushing bond yields higher and reducing the attractiveness of non-yielding assets like gold.
Broader Precious Metals Selloff
The broader precious metals market has also suffered. Silver has dropped around 23% this month, while platinum is down approximately 19%, highlighting the widespread impact of rising yields and inflation fears.
