Gold (GC=F) and silver prices pushed higher on Tuesday as traders assess the uncertainty in the Middle East and its potential knock-on affect on the global economy.
Gold futures were up about 0.1%, trading around $4,410.40 per troy ounce, while spot gold fell slightly to $4,402 per ounce. In the last five sessions, gold futures have lost almost 12%.
Silver (SI=F) futures gained 0.7%, trading at $69.81 per ounce. Silver is still almost 12.5% lower over the past five sessions.
Analysts put the muted price action and earlier losses down to changed inflation expectations, comparing the move to the dip in price during the covid pandemic.
Oil’s price increases over the past month due to the US-Iran conflict have stoked expectations for higher inflation, with energy prices tipped to rise due to the fact that around 20% of the world’s oil and gas passes through the Strait of Hormuz on a typical day.
The prospect of potential interest rate hikes by the Federal Reserve and Bank of England (BoE) in response to this have changed the landscape — meaning there is a higher opportunity cost of storing wealth in precious metals. Yesterday, swaps traders changed their bet on a BoE interest rate hold to four quarter-point rate increases in 2026.
Meanwhile, other macro-events are on the calendar.
“While the core focus remains on geopolitical risk, sizeable divergences across the March manufacturing and services PMIs would be needed to influence price action today,” said Aaron Hill chief market analyst at FP Markets.
“The PMIs serve as the first read on the economy since the Middle East conflict began. Interestingly, every single PMI reading – for the eurozone, the UK, and the US – is expected to come in lower than February’s data.”
