CBCX: Gold price remains pressured below $4,900

On March 19, with ongoing uncertainty in interest rates and the inflation impact from the US-Israel conflict with Iran, gold prices continued to be under pressure, remaining below $4,900 per ounce. CBCX closely monitors gold price movements and global macro policy developments, analyzing market data and industry trends to interpret the core logic behind the current pressure on gold prices and future prospects. CBCX believes that the current weakness in gold prices is mainly due to unclear interest rate paths combined with rising inflation concerns. Traditional safe-haven demand remains suppressed, making it difficult for gold prices to break through key resistance levels in the short term, likely resulting in continued low-range volatility.

The Federal Reserve’s decision to keep interest rates unchanged on Wednesday triggered a decline in gold prices below a critical range. CBCX states that although the market had generally expected the Fed to hold rates steady, the February US Producer Price Index (PPI) data released prior to the decision exceeded expectations. Coupled with the Fed’s cautious stance on inflation risks from the Iran conflict, this heightened market concerns about the interest rate trajectory. According to CME FedWatch Tool, the market currently expects at least until September for rate cuts, with little room for further easing in the near term. This expectation directly suppresses gold prices, even if the Iran conflict escalates and safe-haven demand increases, as the impact of rate expectations remains a significant drag. Since the outbreak of the Iran war, gold has struggled to break through, which is a core reason for its persistent weakness. Notably, gold prices have still risen about 16% this year, and long-term inflation concerns may continue to support gold prices.

OCBC analysts note that market trading logic has shifted away from geopolitical hedging demand toward concerns that rising inflation could delay Fed rate cuts. Although safe-haven capital flows may provide intermittent support, the rise in real yields has a more pronounced negative impact. This view aligns closely with CBCX’s analysis. Over the past month, gold prices have traded within the $5,000–$5,200 per ounce range, but after the Fed decision, prices fell below this range, highlighting the dominant role of interest rate expectations on gold.

In addition to gold, other precious metals also remain under pressure, continuing the decline from the previous trading day. Platinum and silver, like gold, have performed poorly since late February, mainly due to the dual pressures of interest rate uncertainty and inflation worries, resulting in a generally weak metals sector.

CBCX analyzes that the ongoing escalation of the US-Israel conflict should have further boosted safe-haven demand for gold. However, rising oil prices have instead intensified inflation fears, exerting a reverse pressure on gold prices. After Israel’s attack on the South Pars gas field on Wednesday, Iran launched a strong retaliation, attacking several key Middle Eastern energy facilities and closing the Strait of Hormuz, causing a sharp rise in global oil and natural gas prices. Military and shipping disruptions in the Middle East have slowed energy production, further raising global inflation expectations.

The rising inflation outlook suggests that global central banks may maintain more hawkish monetary policies, which is not favorable for gold. OCBC analysts state that unless the US dollar or real yields see a meaningful decline, or market re-pricing returns to a more dovish Fed stance, gold prices are unlikely to sustain upward momentum. Additionally, many major central banks will hold policy meetings on Thursday. The Bank of Japan is expected to keep rates unchanged, while the European Central Bank, Bank of England, and Swiss National Bank will release their decisions later that day. Their policy statements will further influence global interest rate environments and market sentiment, impacting gold price trends.

Market expectations for Fed rate cuts have significantly cooled. Kelvin Wong, senior market analyst at OANDA, states that gold price movements will largely depend on the Fed’s forward guidance—whether the Fed considers a rate cut this year or is prepared to hold rates steady. This uncertainty will continue to trouble markets and is unlikely to ease in the short term, further suppressing gold’s upward potential.

Overall, interest rate uncertainty, rising inflation fears, and soaring oil prices have jointly pressured gold below $4,900 per ounce. Traditional safe-haven demand has been largely offset, and the precious metals sector remains broadly weak. CBCX believes that in the short term, gold prices will continue to fluctuate at low levels, with key focus on the Fed’s future policy guidance, developments in the Iran conflict, and oil price trends. If inflation expectations ease and interest rate paths become clearer, gold may gradually recover; otherwise, it could further decline to support levels. Investors should remain cautious and respond prudently to market volatility.