NEW YORK: Gold rose on Tuesday, buoyed by a pause in the dollar’s rally and easing inflation concerns as oil prices pulled back amid receding expectations of a prolonged conflict in the Middle East. Spot gold was up 1.2percent at USD5,200.29 per ounce as of 9:11 a.m. ET (1311 GMT). US gold futures for April delivery were up 2.1percent at USD5,210.70.
The dollar took a breather after rallying the previous day, supporting gold prices as a weaker dollar makes greenback-priced bullion more affordable for other currency holders.
Oil prices plummeted on Tuesday after soaring to a more than three-year high in the previous session as US President Donald Trump predicted the war in the Middle East could end soon, easing concerns about prolonged disruptions to oil supplies.
On the ground, however, there were no signs of the war easing, with Tehran residents reached by Reuters describing US-Israeli bombardment of the capital overnight as the fiercest of the conflict.
Meanwhile, G7 energy ministers are expected to discuss how to tackle soaring energy prices in a call on Tuesday.
“With oil prices easing from peaks above USD100 - still inflationary and therefore supportive for gold, but no longer high enough to seriously limit the Fed’s ability to cut rates - investors are gaining comfort that the debasement trade may be re-energizing as we move on,” said Bart Melek, global head of commodity strategy at TD Securities.
Despite being viewed as an inflation hedge, gold loses some appeal when interest rates rise, as it offers no yield. Investors also await US consumer price index data and Personal Consumption Expenditures (PCE) data due later this week.
The Federal Reserve is expected to hold rates steady at its upcoming March 17-18 meeting, but may have a broader discussion given key supply-chain risks are on the table again. Meanwhile, gold in Dubai is trading at a discount to London as flight constraints caused by the conflict keep more bullion in the local market, while demand remains subdued.
Spot silver rose 2.4percent to USD89.21. Spot platinum gained 2.1percent at USD2,228.35, while palladium added 0.2percent to reach USD1,693.70.
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