Gold prices declined during trading on Tuesday, continuing their losing streak for the 10th consecutive session, under pressure from the strength of the US dollar and declining expectations of an imminent interest rate cut by the Federal Reserve.
Dollar pressures and monetary policy expectations
The dollar rose sharply on Tuesday, making gold priced in US dollars more expensive for holders of other currencies, which reduced demand for it.
One analyst pointed out that markets have begun pricing in the likelihood of interest rate hikes, based on the fact that a war in Iran could lead to higher global inflation rates, which could prompt central banks to adopt tighter monetary policies, putting pressure on gold prices.
According to technical estimates, the first support level for gold is at $4,275, followed by the $4,000 level, while the resistance levels are concentrated at $4,650 and $4,840.
Spot gold prices have fallen by about 17% since the outbreak of the US-Israeli war on Iran on February 28, at a time when the dollar has emerged as one of the biggest beneficiaries of safe-haven flows.
On the political front, Iran on Monday denied holding any negotiations with the United States, after US President Donald Trump announced he was postponing his threat to bomb Iran’s power grid, citing what he called productive talks with unidentified Iranian officials.
Geopolitical tensions and rising energy prices
A Pakistani official and another source reported that direct talks to end the conflict could be held in the capital, Islamabad, as early as this week.
Meanwhile, oil prices remained above $100 a barrel after Tehran denied discussing ending the war in the Middle East with Washington.
Higher oil prices typically lead to increased inflationary pressures due to higher transportation and manufacturing costs. While high inflation enhances the appeal of gold as a hedge, higher interest rates reduce demand for non-yielding assets like gold.
Gold at settlement yesterday
Gold prices significantly reduced their losses at the close on Monday, after the US president announced negotiations with Iran to reach a peace agreement and end hostilities, including the closure of the Strait of Hormuz.
Gold futures for April delivery fell 3.7% to $4,407.30 an ounce, after touching $4,100 earlier in the session, a drop of 10%.
Gold now
The price of gold in spot trading fell by 0.15% to $4,400 an ounce, after losing about 22% of its value in just 10 sessions.
During the previous session, the precious metal fell to $4,097.99 an ounce, its lowest level since November 24, before later paring some of its losses.
Meanwhile, U.S. gold futures for April delivery fell 0.1% to $4,433 an ounce, amid continued selling pressure on the metal.
Other minerals
As for other metals, silver prices fell by 3.4% to $66.80 per ounce.
Platinum also fell by 2.1% to $1,841.68, while palladium dropped by 2.7% to $1,395.25 an ounce.
