Gold Continues to Struggle Near $4,600
Gold prices surged around 4% to $4,580 per troy ounce on Wednesday (March 25), signaling that the precious metal is beginning to reverse course after being under pressure in recent sessions. This increase occurred as the market reassessed geopolitical and inflation risks, while also responding to a rapid shift in global sentiment.
In theory, gold is known as a safe-haven asset that tends to benefit from high inflation and heightened geopolitical uncertainty. However, since the Israel-US war began, gold has actually fallen around 13%. One explanation widely discussed by market participants is positioning: after a sharp rally of around 51% in the past 12 months, gold becomes the most "sellable" asset when war tensions trigger a need for liquidity and profit-taking.
Market sentiment appeared to improve on Wednesday after US President Donald Trump implied Iran was offering a "gift" related to oil and gas, while mediators from Turkey, Egypt, and Pakistan pushed for a US-Iran meeting as early as Thursday. This diplomatic narrative helped ease market tensions that had previously been very risk-off.
According to ING analysts, the combination of weakening oil prices and a softer US dollar are two key factors helping gold strengthen today. As energy inflation pressures ease and the dollar weakens, the opportunity cost of holding gold tends to decrease, facilitating a price recovery.
However, ING cautions that gold still faces potential short-term pressure. The bank believes some central banks, particularly those in countries vulnerable to spikes in energy import costs, may consider tapping gold reserves to stabilize their currencies—a factor that could limit the continuation of gold's rally if institutional selling occurs.
Newsmaker's takeaway: Today's gold surge reflects easing macroeconomic pressures (oil and dollar) and improving diplomatic sentiment. However, the future direction remains highly dependent on the consistency of conflict de-escalation and liquidity dynamics, including potential central bank action.
Source: newsmaker.id
