Gold prices dipped slightly in Asian trading on Monday after experiencing sharp swings last week, as the focus remained entirely on a potential escalation in the US-Israeli war on Iran.
Spot gold rose 0.4% to $4,509.51 an ounce by 07:36 (03:36 GMT), while gold futures also climbed 0.4% to $4,537.40 an ounce. Spot gold had fallen to a low of $4,000 an ounce last week before rebounding to nearly $4,500 an ounce by Friday.
Among other precious metals, spot silver fell 0.9% to $69.09 an ounce, while spot platinum rose 1.8% to $1,898.73 an ounce.
Gold's rebound appears technically driven, but macroeconomic headwinds remain - OCBC
OCBC analysts said that gold's rebound from last week's lows appears to be largely technical, especially since prices have fallen by as much as 20% since the start of the conflict with Iran.
They noted that the downward momentum appears to be showing some signs of slowing down, as gold's relative strength index recovers from oversold territory.
But they warned that it is uncertain whether gold’s recovery can be sustained, with key resistance levels for spot gold seen at $4,624.00 an ounce, $4,670.00 an ounce, and $4,850.00 an ounce.
A more sustainable recovery will likely require prices to reclaim and maintain these levels. Otherwise, gold may continue to trade on a weaker footing, OCBC analysts said.
They noted that rising energy prices threaten to keep inflationary pressures high, which in turn raises Treasury bond yields and creates a more challenging environment for gold in the interim.
Escalating war with Iran in focus as Houthis attack Israel
Markets remained wary of a potential escalation in the war with Iran after the Iranian-backed Houthi group in Yemen attacked Israel over the weekend. The Houthis could open a new front in the war, given their ability to launch strikes in the Red Sea.
Iran said it was prepared for a ground invasion by the United States, especially after reports late last week showed Washington was massing thousands of troops in the Middle East.
President Donald Trump told reporters that negotiations with Iran were progressing well and that a deal could be close. However, he did not provide a clear timeline, while also warning of further attacks against Tehran.
Last week, Trump extended the deadline for attacks on Iran's energy infrastructure to early April.
Iran has largely rejected the idea of direct talks with the United States since the start of the war in late February.
