Gold prices moved lower as the US dollar gained strength and oil climbed to the highest level of this year, driven by heightened geopolitical tensions in the Middle East.
As of 4:01 P.M. (GMT+7), spot gold declined 1.42% to USD 5,096.29 per ounce, reversing an earlier drop of more than 2%. U.S. gold futures for April delivery also eased 1% to USD 5,106.30 per ounce. Meanwhile, the dollar index rose 0.5%, paring an earlier gain of as much as 0.7%. Nonetheless, it reflects broad-based dollar strength.
In the energy market, crude oil prices rose 13.58% to around USD 103.24 per barrel after earlier surging to USD 118, the highest level since 2022. This jump followed the intensified U.S.-Israeli hostilities involving Iran, prompting some major oil exporters from the region to reduce output amid fears of continued shipping disruptions through the Strait of Hormuz.
The upswing in oil prices has amplified inflation concerns, strengthening the case for the Federal Reserve to maintain or potentially further tighten monetary policy. According to CME Group’s FedWatch Tool, the probability that the Fed will hold rates in June has increased to over 51%, up from below 43% before the conflict began.
Despite the ongoing volatility and loss of momentum, gold has accumulated gains of around 18% since the start of the year. Sustained demand from central banks has also buoyed prices, with the People’s Bank of China marking its 16th consecutive month of gold purchases in February. Investor appetite for safe-haven assets has been underpinned by President Donald Trump’s approach to trade and global political affairs, as well as his actions toward the Federal Reserve.
