Gold Falls 1% as Dollar Pressures, Political Clashes Maintain Inflation Risk
Gold prices fell more than 1% on Thursday (March 12th), pressured by a strengthening US dollar and fading hopes of lower borrowing costs as the Iran war rekindled inflation concerns.
Spot gold prices fell 1.1% to US$5,118.16 per troy ounce, while US gold futures for April delivery closed 1% lower at US$5,125.80.
The dollar strengthened for the third straight session, making greenback-denominated gold more expensive for holders of other currencies and reducing its appeal.
Meanwhile, Phillip Streible, chief market strategist at Blue Line Futures, cited the combination of a higher dollar index, rising Treasury yields, and the absence of interest rate cuts as negative factors, although the Middle East conflict continued to generate some safe-haven flows.
On the geopolitical front, reports of two tankers burning in Iraqi waters were seen as an escalation of Iranian attacks that tightened Middle Eastern energy supplies and pushed oil prices sharply higher that day. Iran's new supreme leader, Ayatollah Mojtaba Khamenei, also stated that Iran would retaliate, maintain the closure of the Strait of Hormuz, and attack US bases.
Rising crude oil prices are adding to inflationary pressures through transportation and production costs.
Streible believes stabilizing oil prices will help support gold, while bullish support remains from central bank purchases and ETF inflows, which are said to have remained positive throughout the year. In this context, Chile's central bank reportedly made its first major gold purchase since at least 2000, with gold reserves rising to US$1.108 billion in February from US$42 million in January, equivalent to 2.2% of total reserves.
Among other metals, silver fell 1% to US$84.90, after rising more than 146% last year. BMI analysts expect silver to average US$93 per ounce in 2026, with investment demand supporting the trend, despite the risk of a decline in demand due to high prices for solar panels and jewelry. Platinum fell 1.1% to US$2,145.75, while palladium fell 1% to US$1,620.86.
Source: Newsmaker.id
