Gold Prices Rebound Amid Weakening Dollar and Global Tensions

Gold prices edged higher in the international market on Monday, primarily driven by a softening US dollar. However, gains remained capped as rising fuel costs and shifting interest rate expectations weighed on investor sentiment.

Spot gold rose 0.3% to $4,505.86 per ounce by 9:30 AM (Bangladesh Time). Simultaneously, US gold futures for April delivery gained 0.3%, reaching $4,535.80. A weaker dollar typically makes gold more affordable for holders of other currencies, boosting demand.

Nicholas Frappel, head of institutional markets at ABC Refinery, noted that last week's price action suggests gold was oversold and is now entering a rebound phase. However, he cautioned that the market remains volatile due to rapidly changing global geopolitics.

Global tensions escalated following weekend attacks by Houthi rebels on Israel. This conflict pushed Brent crude oil prices above $115 a barrel. Oil prices have surged approximately 60% in March, marking a record monthly increase.

The spike in energy costs is intensifying inflationary pressures. Consequently, market expectations for a US Federal Reserve interest rate cut this year have faded. While gold is traditionally a hedge against inflation, high interest rates often reduce demand for non-yielding assets.

Despite the Monday rebound, gold has faced a challenging month, falling over 14%—its sharpest monthly decline since October 2008. The dollar's 2% gain since the onset of the conflict involving the US, Israel, and Iran has maintained significant downward pressure on the precious metal.

Other Precious Metals

Spot Silver: Up 0.8% to $68.67/oz

Platinum: Up 2.5% to $1,909.45/oz

Palladium: Up 3.2% to $1,420.63/oz