Gold Rebounds Amid Geopolitical Issues, Yields Hold Back Gains
Gold prices rose on Wednesday (March 4), recovering some of the previous session's losses, after buyers capitalized on price weakness amid heightened uncertainty following the fifth day of war in the Middle East. Spot gold rose around 2.2% to trade around US$5,198.58 per ounce, while US gold futures gained 1.7% to US$5,211.20.
This gain came after a four-day winning streak was halted on Tuesday, when the market reassessed gold's role as a hedge against a combination of unfavorable factors: a briefly strengthening dollar, rising bond yields, and a surge in energy prices that re-elevated inflation risks. On the policy front, these inflation risks prompted market participants to reduce expectations of monetary easing, which is usually a drag on the precious metal because gold does not provide a yield.
Volatility across assets also contributed to short-term flows. Tuesday's sharp selloff in equities reportedly prompted some investors to liquidate positions to meet margin requirements in other portfolios, a factor that could amplify gold's daily swings, despite the safe-haven narrative.
Among other precious metals, a rebound was also seen in silver. Reuters noted that silver rallied sharply after a significant decline in the previous session, while the spot price of silver was recorded at around US$86.57 per ounce (updated 8:31 a.m. ET).
The market is now waiting to see whether the geopolitical risk premium is strong enough to keep gold at high levels, or whether it will be held back again by the direction of the dollar, yield movements, and changes in interest rate expectations as energy inflation risks influence central bank policy projections. (alg)
Source: Newsmaker.id
