Gold prices increased by 3.2% on Tuesday, reaching $4,652.31 per ounce by 1:31 p.m. EDT (1731 GMT), marking the highest level since March 20. Meanwhile, U.S. gold futures closed 2.7% higher at $4,678.60. Despite this rise, gold remains on track for its sharpest monthly decline since October 2008, driven by ongoing inflation worries and expectations of higher interest rates influenced by the conflict in Iran.
The U.S. dollar weakened slightly but is still positioned for a monthly gain. A stronger dollar typically makes gold, priced in greenbacks, more expensive for holders of other currencies, which can suppress demand. The recent rally in gold reflects some optimism about a potential de-escalation in the Middle East, though further gains are needed to confirm a sustained upward trend.
Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that while the current upswing is promising, the long-term outlook remains bullish. He highlighted ongoing fundamental supports such as de-dollarization and continued central bank purchases as key factors underpinning gold’s value.
In a significant development, reports indicated that former President Donald Trump was open to ending military operations against Iran even if the Strait of Hormuz remains largely closed. Meanwhile, U.S. Defense Secretary Pete Hegseth warned that the coming days would be critical in the conflict with Iran, cautioning Tehran that the situation could escalate if a deal is not reached.
Spot gold has declined 11.8% in March, pressured by rising oil prices triggered by the Middle East war. The surge in energy costs has heightened inflation concerns and led markets to revise their expectations for interest rate hikes. Although gold is traditionally viewed as a hedge against inflation and uncertainty, higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
Looking ahead, BMI has maintained its 2026 gold price forecast at an annual average of $4,600 per ounce. Goldman Sachs remains more optimistic, projecting gold could reach $5,400 by the end of 2026.
Other precious metals also experienced gains on Tuesday. Spot silver rose 6.7% to $74.64 per ounce but is down 20.4% for the month. Analysts at BNP Paribas expect silver to trade between $65 and $75 per ounce through 2026, anticipating a shift to a physical market surplus by 2027. Platinum increased 3.1% to $1,958.05, and palladium climbed 5.2% to $1,479.25, though both metals are also set for monthly declines.
