Gold prices climb as US dollar weakens and inflation concerns ease

NEW YORK: Gold prices advanced on Tuesday, buoyed by a softer US dollar and reduced inflationary pressures following comments from US President Donald Trump suggesting a possible end to the conflict in the Middle East.

Spot gold rose 0.5 percent to $5,161.54 per ounce as of 04:29 GMT. Meanwhile, US gold futures for April delivery increased by 1.3 percent to $5,171.10 per ounce. The US dollar declined by 0.3 percent, making gold—which is priced in dollars—more affordable for investors holding other currencies.

The rally in gold was attributed to developments in the Middle East, with President Trump indicating that there could be a de-escalation in the conflict. Kelvin Wong, a senior market analyst at OANDA, noted, “Gold prices rose due to the news flow from US President Trump himself, stating that there is a potential for de-escalation… So what we could see is that potential inflation expectation starts to tone down given this dramatic fall in oil price.”

Following President Trump’s remarks, oil prices dropped by more than 10 percent. This decline in energy costs is expected to ease inflationary concerns, which in turn could reduce the likelihood of central banks raising interest rates—a scenario generally considered favorable for non-yielding assets like gold.

However, Wong also cautioned that the situation remains fluid, warning that US military actions could intensify if Iran attempts to block key interests.

Market participants are closely monitoring geopolitical developments and their impact on commodity prices, particularly gold and oil, as shifts in these markets often influence broader economic trends and policy decisions.