Gold Moves Above $4,600, US Dollar Weakens
Gold prices (XAU/USD) traded with a positive bias on Tuesday (March 31), amid hopes for a de-escalation in the Middle East conflict. However, price action remained trapped within a one-week trading range, reflecting uncertainty among traders amid mixed signals regarding geopolitical developments and expectations of a change in Federal Reserve (The Fed) monetary policy.
At the time of writing, XAU/USD was trading around $4,618, up nearly 2.30% on the day. The US Dollar Index (DXY), which tracks the greenback against six major currencies, was trading around 100.12, slightly weaker after hitting a ten-month high of 100.64.
Cause:
A Wall Street Journal report on Tuesday stated that President Donald Trump is willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed. This raised hopes that the conflict could end soon, although the US's primary goal is to undermine Iran's naval and missile capabilities and continue to exert diplomatic pressure to restore trade flows.
Consequences:
Nevertheless, tensions remain high, with Iran warning that it could target US companies in the region starting April 1 in retaliation for recent attacks. Iran's plan to impose a shipping toll in the Strait of Hormuz also raises concerns about disruptions to global energy supplies. Gold prices, which serve as a safe-haven asset, are supported by a weakening US dollar and rising geopolitical uncertainty, which boost demand for the precious metal.
Source: Newsmaker.id
