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Geopolitics · Gold · Inflation · Iran
Gold spot prices rose 0.8% to $4,685.54 per ounce, and gold futures for June delivery ticked up 0.6% to $4,710.84 per ounce on Tuesday, while the dollar weakened, as investors monitored U.S. President Donald Trump's impending deadline for Iran to reopen the Strait of Hormuz.
Trump threatened to "decimate every bridge and power plant" in Iran if the Strait of Hormuz, which handles one-fifth of global oil, remains closed, pushing oil prices higher and threatening inflation. Iran demands sanctions relief, security guarantees, and compensation, which the White House will not accept.
Despite bellicose language, Trump also mentioned a diplomatic resolution to the conflict, which began with U.S. and Israeli strikes in late February. China's central bank continued its gold purchases for the seventeenth consecutive month, holding 74.38 million fine troy ounces by March end, up from 74.22 million in the prior month.
Over the past month, gold has dropped more than 8% due to expectations of higher interest rates from energy-fueled inflation and a stronger dollar, which has gained 0.8%. UBS strategist Joni Teves expects global official sector gold purchases of 800-850 tonnes this year, maintaining a $5,000 average price target and a $5,600 year-end target, citing long-term investor underinvestment and diversification needs.
