Gold rebounds above $4,450 as Middle East tensions persist

NEW YORK (March 24) Gold price (XAU/USD) recovers some lost ground to around $4,470  during the early Asian session on Wednesday. The precious metal edges higher following a period of extreme volatility, with the price falling to a four-month low near $4,100, its worst weekly performance since 1983. 

Bloomberg reported on Tuesday that US President Donald Trump signaled that Iran had offered a “present” as a show of good faith in negotiations he has claimed are ongoing to end a 25-day conflict that’s upended global markets, even while he deploys more troops to the Middle East. 

This headline came as Mohsen Rezaei, the senior military adviser to Iranian Supreme Leader Mojtaba Khamenei, said on Tuesday that the war will continue until Iran receives full compensation for damage it has sustained. Uncertainty and persistent Middle East tensions could boost the yellow metal, a traditional safe-haven asset in the near term. 

On the other hand, ongoing conflicts in the Middle East push energy prices higher and reduce expectations of US interest rate cuts. This, in turn, could weigh on the non-yielding Gold in the near term. “The prospect of higher interest rates as a result of the war could boost government bonds among investors, at the expense of non-yielding precious metals,” market strategists told CNBC.

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