Gold prices edged up on Tuesday as hopes for de-escalation in the Middle East conflict eased inflation fears, bolstered by a weaker US dollar and plunging oil costs.
Spot gold rose 0.7 percent to $5,174.49 per ounce by 0631 GMT, while US gold futures for April delivery climbed 1.6 percent to $5,184.5da520 The gains partially offset a two percent drop the previous day, driven by concerns over soaring energy prices from the ongoing strife.
US President Donald Trump’s remarks hinting at potential resolution in the region triggered a more than five percent fall in oil prices, alleviating worries about war-fueled inflation that could delay Federal Reserve rate cuts.
Kelvin Wong, senior market analyst at OANDA, noted: “Due to the news flow from U.S. President Trump himself, stating that there is a potential for de-escalation… So what we could see is that potential inflation expectation starts to tone down given this dramatic fall in oil price.”
The conflict has disrupted the Strait of Hormuz, stranding tankers and forcing output cuts among major producers, previously pushing energy costs to multi-year peaks.
Trump’s warning of intensified military action if Iran further impedes shipping added a layer of uncertainty.
A 0.4 percent dip in the US dollar index made gold more attractive to overseas buyers, while lower inflation prospects could encourage looser monetary policies.
Investors are eyeing US data releases, including February’s Consumer Price Index on Wednesday and Personal Consumption Expenditures on Friday, with markets betting the Fed will maintain rates at its March 18 meeting.
Other metals followed suit: silver gained two percent to $88.73 per ounce, platinum rose 0.7 percent to $2,196.35, while palladium slipped 0.3 percent to $1,685.01.
Wong cautioned: “The market is pricing in a fragile peace, but one misstep could unwind it all.”
