Risk-Off Strengthens, Gold Becomes Main Refuge
Gold (XAU/USD) maintained its strong rally into the European session on Monday (March 2nd) and returned to trading near $5,400, its highest level since late January. Rapid capital flows from riskier assets to safe havens made the precious metal a prime target as global sentiment heated up.
In European trading, XAU/USD hovered around $5,396/oz after hitting an intraday high of $5,419.
The main driver came from geopolitical escalation in West Asia that has shaken markets since the weekend. This situation prompted investors to put up hedges more quickly, and gold was once again treated as a safe haven asset during times of heightened uncertainty.
On the US macro front, the latest PPI data also kept inflation concerns alive. With growth slowing, the market sees the Fed in a precarious position: cutting interest rates too quickly risks rekindling inflation, but holding rates still too long risks depressing the economy. This situation typically remains supportive of non-yielding gold.
Interestingly, the dollar briefly strengthened, which typically acts as a brake on gold. But the gold rally persists—a sign that the market is currently more focused on risk protection than simply the exchange rate effect.
Looking ahead, traders will be monitoring US data (starting with the ISM Manufacturing, then the ADP/ISM Services, and finally the NFP). However, the main driver remains geopolitical headlines: if tensions ease, the rally could slow; if they escalate further, safe-haven demand could potentially remain strong.
Source: Newsmaker.id
