Oil Volatile, Gold Stuck: Market in a Tug of War!
Gold's recent movements appear "not very significant" because the market is in a tug-of-war phase between two major currents: safe-haven demand due to escalating conflicts, versus tightening financial conditions through relatively high yields. On Thursday, March 5, 2026, XAU/USD did indeed rise slightly by less than 1% to around 5,192,000 per troy ounce after two days of gains, but had previously experienced a sharp daily correction on March 3.
On the "driver" side, the Middle East crisis is keeping hedging demand alive, especially as logistical disruptions are beginning to be felt in energy and trade routes. Several major shipping operators have reported holding or suspending bookings for Gulf routes, underscoring the heightened risks around the Strait of Hormuz. When logistical risks increase, the market tends to price in a price, but this doesn't always translate into an aggressive gold rally if other restraining factors also strengthen.
The main stopping factor comes from US interest rates and yields. The 10-year Treasury yield on March 5th hovered around 4.1% (with a daily range of approximately 4.06–4.12%), so the opportunity cost of holding gold (a non-yielding asset) remains significant. In a yield environment that isn't falling rapidly, the market typically resists paying a premium for the safe-haven gold, unless there's a surprise escalation that significantly alters the global risk profile.
The dollar's condition also contributes to gold's mixed reaction. A weaker dollar does help USD-denominated gold by making it cheaper for non-dollar buyers, but dollar weakness in the context of expectations of a short-term conflict typically reduces the urgency of extreme hedging. As a result, the boost from a weaker dollar can be tempered by diminishing fears, leading gold to rise but not surge.
Meanwhile, oil is more responsive, as the conflict around the Gulf directly impacts supply and shipping mechanisms. Shipping disruptions and security risks at chokepoints like Hormuz are quickly reflected in energy price premiums, as evidenced by Brent's sharp rise at the start of the week before fluctuating following news events. However, oil is also holding back from the question of how long the disruption will actually reduce physical supply, leaving the market tossing and turning as to whether this is a temporary logistical shock or a more structural supply disruption.
Essentially, gold hasn't moved spectacularly because the market is balancing three fundamentals simultaneously: (1) a geopolitical risk premium that is boosting safe-haven demand, (2) persistently high yields that are holding back gold's gains, and (3) a weakening dollar that isn't risk-off enough to drive massive inflows. When these three factors balance each other, what emerges is relatively narrow movements, intraday rotation, and a tendency to wait for confirmation, rather than a one-way trend.
Going forward, the baseline scenario for gold and FX is determined by whether the escalation actually disrupts energy/shipping flows for a prolonged period, or whether it simply subsides and the risk premium erodes. For oil, the key variables are the operational status of Gulf routes and the response of shipping/insurance; for the dollar, a combination of risk sentiment and yield dynamics; for gold, a combination of the two plus expectations for US interest rates as reflected in Treasuries. The market will also be consolidating key rates and their impact on inflation, as returning inflation tends to restrain yield declines and, in turn, limit gold's room for aggressive upside without a new geopolitical catalyst. (asd)
Source: Newsmaker.id
