Gold Rises for Second Day but Braces for Worst Month Since 2008 Amid Geopolitical Tensions

Spot gold advanced 0.6% to $4,518.57 per ounce by 1:32 p.m. ET, following a rally from multi-month lows hit earlier in the week. U.S. gold futures settled 0.7% higher at $4,557.50.

The recent uptick is attributed to renewed safe-haven demand as the conflict in the Middle East shows no signs of resolution, according to Jim Wyckoff, senior analyst at Kitco Metals. He noted that market attention in the near term will center on the war's developments, crude oil price movements, bond yield trajectories, and the performance of the U.S. dollar index.

Despite the two-day rebound, gold is poised for a monthly decline exceeding 14% in March, marking its worst monthly performance since the financial crisis of 2008. Surging energy prices have intensified inflation concerns, prompting a reassessment of interest rate expectations by market participants.

As a traditional hedge against inflation and geopolitical instability, gold's appeal diminishes when interest rates rise, given the asset's non-yielding nature. Federal Reserve Chair Jerome Powell indicated the central bank can adopt a wait-and-see approach regarding the economic and inflationary impacts of the Iran conflict. The Fed maintained its benchmark interest rate unchanged in the 3.50%-3.75% range earlier this month.

Upcoming economic data releases this week, including U.S. job openings, retail sales figures, the ADP employment report, and the critical nonfarm payrolls report, could further influence market sentiment.

Market analyst Fawad Razaqzada from City Index and FOREX.com identified the $4,700–$4,750 range as a critical resistance zone for any sustained recovery in gold. He cautioned that a failure to breach this level could see the current bounce fade, similar to previous attempts.

In the broader precious metals complex, spot silver rose 1% to $70.27. Platinum gained 1.6% to $1,891.71, while palladium climbed 2.9% to $1,416.47.