Gold Extends Rally as Traders Await Signals on Potential End to Iran War
Gold extended a three-day advance as markets looked to fresh signals from U.S. President Donald Trump on a potential end to the war in Iran. Bullion climbed as much as 2.7% to near $4,800 an ounce on Wednesday, adding to a 3.5% surge in the prior session, ahead of Trump’s prime-time address on a Middle East conflict now entering its fifth week.
A White House official said Trump is expected to portray the U.S. military campaign in Iran as a success and emphasize that operations could conclude within two to three weeks. The speech is set to frame the U.S. as having met or exceeded its military objectives, the official said, speaking on condition of anonymity to discuss the remarks before they are delivered.
Despite the anticipation, the path to de-escalation remains uncertain. Trump has alternated between saying a resolution is close and warning of an escalation in military action. Iran has also outlined conditions for ending the fighting, including issues related to authority over the Strait of Hormuz, a strategic chokepoint that, before the war, served as a transit route for roughly a fifth of global oil and liquefied natural gas shipments.
The Middle East war has disrupted global markets and tightened supplies of energy and other goods, stoking inflation concerns. In recent sessions, however, the narrative has increasingly shifted toward growth risks, prompting bond traders to pare back expectations for further rate hikes aimed at countering inflationary pressures. Federal Reserve Chair Jerome Powell said earlier this week that longer-term inflation expectations remain anchored.
“Gold’s safe-haven appeal tends to re-emerge when the narrative shifts from inflation to growth risk,” said Yuxuan Tang, Asia head of rates and FX strategy at JPMorgan Private Bank. She said the Federal Reserve has limited scope to raise rates in the current cycle and is more likely to focus on strains in the labor market. A lower-rate backdrop typically supports gold, which offers no interest income.
Even with the rebound in recent days, gold had posted a near-12% decline in March, its worst monthly performance since October 2008. David Higgins, head of trading at bar and coin dealer Merrion Gold, said retail buying slowed in the early days of the March slide as the move ran counter to expectations of a rally amid intensifying conflict. Activity has picked up again over the past week, he said, with retail buyers more focused on inflation and less sensitive to higher rates than institutional participants.
Some banks remain constructive on the outlook for gold. Goldman Sachs, in a note published Tuesday, reiterated a year-end forecast of $5,400 an ounce, citing continued central-bank purchases and an expectation of two U.S. rate cuts later this year.
Spot gold rose 1.9% to $4,760.08 an ounce as of 3:15 p.m. in New York. Silver added 0.2% to $75.12, platinum edged higher, while palladium dipped. The Bloomberg Dollar Spot Index slipped 0.3%.(mrv)
Markets are watching Trump’s remarks, developments around the Strait of Hormuz, shifts in U.S. rate expectations, dollar moves, and signals from central-bank demand and broader safe-haven flows as key drivers of near-term volatility in gold.
Source : Newsmaker.id
