Gold prices rose in Asian trade on Tuesday, seeing some bids after logging deep losses in March as rising inflation expectations on the back of the U.S.-Israel war on Iran battered non-yielding assets such as metals.
Metal markets were encouraged by a report that U.S. President Donald Trump was considering ceasing military action in Iran, as the conflict looked to extend beyond his initial four-to-six-week timeline.
Bullion also took some support from U.S. Federal Reserve Chair Jerome Powell stating that long-term inflation remained grounded past any near-term shocks.
Spot gold rose 1% to $5,556.54 an ounce by 01:17 ET (05:17 GMT), while gold futures rose 0.6% to $4,587.01/oz.
Other precious metals also advanced on Tuesday. Spot silver jumped 2.7% to $71.9805/oz, while spot platinum rose 0.8% to $1,914.85/oz, with both metals also set for deep March losses.
Trump considering winding down Iran war without reopening Hormuz- WSJ
Trump told his aides he was willing to end the military campaign against Iran while leaving the Strait of Hormuz closed, the Wall Street Journal reported on Monday evening.
Trump and his aides gauged that a mission to reopen Hormuz will likely push the conflict beyond the president’s initial timeline, and could also involve a complex military operation.
Trump decided that the U.S. could wind down hostilities with Iran after achieving its main goals of denting Iran’s navy and missile capabilities.
Washington will then pressure Tehran diplomatically to reopen the strait, and could also press Gulf and European allies to take point on the reopening.
The report drummed up some hopes of an end to the conflict, although a continued closure in Hormuz– which supplies 20% of the world’s oil– is likely to keep energy and inflation concerns in play.
Gold heads for worst month in nearly two decades
Despite this week’s gains, gold prices were headed for their worst monthly performance in 17 years.
Spot gold was trading down nearly 14% in March, and was also set to snap a seven-month winning streak.
The yellow metal was battered by growing doubts over more interest rate cuts by the Fed, especially as the onset of the Iran war boosted oil prices and ramped up expectations of higher inflation.
Some major central banks, including the European Central Bank and the Bank of Japan, also signaled potential rate hikes to quell energy-fueled inflation, driving up yields and denting the appeal of non-yielding assets.
This trend left other precious metals also headed for deep monthly declines. Spot silver was down 23% this month, while spot platinum was set to lose about 19%.
