Gold Rises for Third Straight Day on Rising Hopes of Middle East Conflict
Gold prices continued their rise for the third straight day on Wednesday (April 1), driven by hopes that the wars in the Middle East may be nearing an end.
Spot gold prices surpassed $4,700 an ounce, while stocks rallied and the U.S. dollar weakened after President Donald Trump stated that he expected the United States to end the wars within weeks.
However, despite this week's rebound, the nearly 12% decline in March made gold's performance its worst since October 2008. Nonetheless, gold remains vulnerable to a broader liquidity crunch and a stronger U.S. dollar, although so far the decline in gold prices has been met with buying, not a loss of confidence.
One key factor to watch is upcoming central bank purchasing data, which will provide an indicator of whether the decline in official sector purchases earlier this year signals a longer pause or is merely a temporary respite. Recent selling from Turkey has also not yet been fully reflected in the data.
Additionally, earlier this week, Fed Chairman Jerome Powell stated that long-term US inflation expectations remain subdued and that current policy is "well-positioned to wait and see."
Cause: The rise in gold prices was fueled by hopes for an end to the war in the Middle East and Trump's statements indicating that the war could end soon. The sharp decline in gold prices in March was caused by global uncertainty and concerns over higher interest rate policies.
Effect: If the war in the Middle East truly subsides and the geopolitical situation improves, it is likely that central bank gold purchases will increase again. Meanwhile, a strengthening dollar and Fed policy could further depress gold prices.
Source: newsmaker.id
