Gold continues its gains thanks to the decline in the dollar

Gold prices continued to rise for the fourth consecutive session today, Wednesday, with the decline of the dollar and the rise of other risky assets with renewed cautious hopes for a calming of the Middle East conflict.

The price of gold in spot transactions increased 2.5 percent to $4,784.22 (per ounce) by 1730 GMT, after it had previously risen to the highest level since March 19. US gold futures for April delivery also rose 2.9 percent to $4,813.10.

The dollar fell for the second day in a row, making gold denominated in the US currency less expensive for holders of other currencies.

Bob Haberkorn, market analyst at RJO Futures, said: “Gold prices may return to exceed the level of $5,000 per ounce if we are on a path that leads to de-escalation, because this may push expectations of interest rate cuts to reappear.” He added: “The focus is on Iran and the Strait… how the conflict will unfold and what the path may look like later.”
Tony Sycamore, a market analyst at IG, said: “Ending the conflict may be a double-edged sword (for gold). On the one hand, a permanent peace agreement will lead to a decline in geopolitical demand for safe haven assets that supported prices in the period preceding the conflict.”

He added that on the other hand, lower oil prices and inflation may revive expectations of a rate cut this year, which may provide a boost to prices.
Gold fell in spot transactions by more than 11 percent in March, as high oil prices stoked fears of inflation and reduced market expectations for monetary easing.

Gold is usually considered a hedge against inflation and geopolitical risks, but high interest rates make it less attractive to investors because it is an asset that does not generate a return.

The national employment report issued by ADB showed that jobs in the American private sector increased steadily in March. US retail sales rose strongly in February, but higher gasoline prices may limit spending in the coming months.

As for other precious metals, silver rose in spot transactions 1.2 percent to $76.03 per ounce, platinum increased 1.6 percent to $1,979.30, and palladium advanced 1.3 percent to $1,495.95.