Gold Climbs Over 3% on Dip Buying as Investors Monitor Middle East Conflict
Gold prices increased by more than 3% on Friday, supported by dip-buying after a previous decline, while investors remained focused on developments in the Middle East looking for indications that tensions might ease.
As of 11:39 a.m. ET, spot gold rose 3.6% to $4,536.29 per ounce. U.S. gold futures for April delivery also gained 3.6%, reaching $4,533.70.
Daniel Pavilonis, senior market strategist at RJO Futures, stated that the recent selloff provided a strong buying opportunity, noting that prices dropped below the 200-day moving average, which he described as an incredible moment to acquire gold.
Earlier in the week, spot gold had fallen to a four-month low of $4,097.99 on Monday. Pavilonis expects a slow, steady rise in prices over the coming weeks. He mentioned that if the Iranian situation resolves, it could create a favorable environment for riskier investments.
Oil prices stayed above $110 per barrel even after U.S. President Donald Trump extended a deadline for Iran concerning the Strait of Hormuz, following Tehran's rejection of a 15-point U.S. proposal to end the conflict.
The war, now in its fourth week, has spread throughout the Middle East, impacting the global economy through soaring energy and fertilizer prices that have intensified inflation fears.
Rising inflation has altered the Federal Reserve's outlook, shifting expectations toward possible interest rate hikes. Such hikes usually pressure gold by increasing the opportunity cost of holding the non-yielding asset.
According to CME Group's FedWatch Tool, traders have fully priced out any U.S. rate cuts for 2026, compared to expectations for two cuts before the war started.
However, Commerzbank upgraded its gold price forecasts, raising its year-end target to $5,000 per ounce from $4,900. The bank believes the recent pullback is unsustainable and anticipates the Iran war ending in the spring. This could reduce current expectations for U.S. rate hikes. Commerzbank projects the Federal Reserve to resume rate cuts later this year, with a total reduction of about 75 basis points by mid-next year.
In other precious metals, spot silver jumped 4.4% to $71.01 per ounce. Platinum rose 3% to $1,882.05, and palladium climbed 3.7% to $1,403.54.
