Gold heads for biggest monthly drop in more than 17 years
Tue Mar 31 2026
Gold rose on Tuesday but
stayed on track for its biggest monthly drop in more than 17 years as investors
flocked to the dollar as the favoured safe haven amid the Middle East war that
has raised inflation fears and bets for hawkish monetary policy response.
Spot gold climbed 0.9% to $4,550.68 per ounce by 0727 GMT. U.S. gold futures
for April delivery gained 0.5% to $4,580.70.
Bullion has declined
more than 13% this month, putting it on track for its steepest decline since
October 2008. Prices are, however, up about 5% for the quarter, having scaled a
record high of $5,594.82 on January 29. Prices are down 18.70% from record
highs.
"Traders are still seeing gold through the lens of a value investment at
these levels, given where the precious metal was trading just a few months ago.
So, it's a combination of falling
oil, a dip
in the dollar and attractive buying levels, which has propelled gold higher
today," said Tim Waterer, chief market analyst, KCM Trade.
Gold is typically
seen as a hedge against inflation and geopolitical risks, but the war-driven
surge in energy costs is also raising expectations for higher interest rates
and boosting the dollar's appeal as the preferred safe haven.
The dollar was headed for its biggest monthly gain since July, making it as the strongest safe asset, supported by the U.S. status as an energy exporter and investors' flight to cash over the past month of conflict.
Traders have almost completely
priced out any chance of a U.S. rate cut this year from about two cuts
expected before the war. [FEDWATCH]
"If the Strait of Hormuz remains closed, oil prices could remain volatile
with potential for further upside on
supply constraints. So, this high oil story, which has plagued gold prices since the conflict began, hasn't gone away
yet," Waterer said.
Goldman Sachs, however, said it continues to expect gold prices will reach
$5,400 per troy ounce by end‑2026 on central bank diversification and
Federal Reserve easing.
Among other metals, spot silver rose 2.7% to $71.89 per ounce, spot platinum
gained 1% to $1,917.49, and palladium was up 1.5% at $1,427. All three metals
were down about 20% each so far in March.
Source: http://in.reuters.com