Gold Gains Capped by Dollar Strength, Yields Fall
Gold prices (XAU/USD) held steady on Monday (March 30th), paring some of their initial gains as Middle East tensions and shifting interest rate expectations kept market volatility at bay. Gold briefly touched US$4,580 during the European session before returning to around US$4,521, with a daily range of approximately US$4,420–US$4,580.
Key support came from a modest correction in US Treasury yields after briefly surging to multi-month highs. Although yields have eased from their peaks, they remain relatively high, while the US dollar remains slightly stronger, limiting gold's upside. The market is also reassessing the direction of the Fed's policy: previously, the oil surge boosted expectations of a more hawkish stance to curb inflation, but attention has now shifted to the risk of slowing growth due to expensive energy. According to CME FedWatch, the market expects the benchmark interest rate to remain at 3.50%–3.75% until 2026.
Amid the "higher for longer" outlook, gold's recovery is considered challenging due to the rising opportunity cost of holding non-yielding assets. Gold remains down nearly 15% from its March peak of US$5,419 and is on track to break a seven-month monthly uptrend.
Geopolitically, the US-Israel war against Iran is escalating despite reports of negotiations. The involvement of the Iran-backed Houthis has opened a new front following missile and drone attacks on Israel, adding to global trade risks, especially if the threat extends to the Red Sea, while oil flows through the Strait of Hormuz remain disrupted. President Donald Trump said there had been "great progress" in talks and that a deal was "possible," but reiterated his threat to destroy electricity infrastructure, oil wells, and Kharg Island if negotiations fail.
This week, the focus shifts to US economic data, particularly the March manufacturing PMI and the jobs report (NFP), which have the potential to change expectations for yields, the dollar, and the future direction of gold.
Source: Newsmaker.id
