Gold Prices Remain Stable Amid Uncertainty Over Middle East Conflict

Market Report: Gold and Energy Markets

March 10, 2024

Gold prices remained relatively stable, trading near $5,190 an ounce, after experiencing a 1% gain in the previous session. The market's volatility is attributed to conflicting statements by US officials regarding the war in the Middle East, which has led to extreme fluctuations in energy prices.

The war, now in its 12th day, continues to disrupt crude production and refining across the Middle East. The ongoing conflict has resulted in a surge in energy prices, increasing concerns over inflation and reducing expectations of interest rate cuts by the Federal Reserve. Higher borrowing costs are a significant headwind for precious metals, which do not pay interest.

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In response to the increased energy prices, investors have reduced their expectations of Fed policy easing this year. Furthermore, the volume of gold held by exchange-traded funds has declined, with total holdings falling by nearly 30 tons last week, marking the largest weekly selloff in over two years.

Spot gold prices edged down by 0.1% to $5,188.50 an ounce as of 6:50 a.m. in Singapore, while silver added 0.1% to $88.43. Platinum and palladium traded lower. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.1%, reversing a decline in the previous session.