Gold Steady as US-Iran Conflict Boosts Safe-Haven Demand
Gold prices (XAU/USD) held in positive territory around US$5,160 at the start of the Asian session on Thursday (March 5), maintaining gains amid escalating geopolitical tensions. Demand for hedging assets strengthened as the US-Iran conflict escalated in the region, while the market awaited the release of US weekly jobless claims and a speech by Federal Reserve Chair Michelle Bowman, which could potentially influence interest rate expectations.
On the geopolitical front, the Israeli military announced it had launched a new wave of attacks targeting military infrastructure in Tehran. In Washington, Republicans rejected a resolution that would have required President Donald Trump to seek Congressional approval for further US military action against Iran. Earlier, the Chairman of the US Joint Chiefs of Staff said the US would begin "striking deeper" into Iranian territory. This combination of escalation signals maintained risk premiums and supported gold's appeal in the short term.
However, gold's risk appetite competed with US macroeconomic factors that tended to limit upside. The ISM Services PMI rose to 56.1 in February from 53.8, stronger than the expected 53.5. Solid service activity data has the potential to strengthen the view that the US central bank can keep interest rates "higher for longer," which typically supports the US dollar and pressures dollar-denominated commodities, including gold.
The market currently generally still expects the Fed to hold interest rates at least until the summer, despite President Trump's push for a rate cut. In the near term, gold's movement will be sensitive to developments in the US-Iran conflict, the reaction of the US dollar and yields following the release of jobless claims, and the nuances of Bowman's comments regarding the direction of monetary policy. (asd)
Source: Newsmaker.id
