Analysis: The decline in oil prices and interest rate pressures suppress the safe-haven logic; gold prices are under short-term pressure but may still have upside potential in the medium to long term.

Mars Finance News, March 20 — Generally, geopolitical conflicts tend to boost market risk aversion, leading to rising gold prices. For example, after the Russia-Ukraine conflict erupted in February 2022, gold prices quickly surged within half a month. However, since the outbreak of the US-Israel conflict, oil and the US dollar have risen sharply, while gold has experienced consecutive declines. Qu Rui, Senior Vice President of Research and Development at Dongfang Jincheng, stated that ongoing Middle East hostilities are pushing up oil prices and global inflation expectations, which may reinforce the Federal Reserve’s stance to keep interest rates unchanged, putting pressure on precious metals. Adrian Ash, analyst at BullionVault, said, “The timing of future rate cuts by central banks will be further delayed. From a technical perspective, this is unfavorable for gold.” Daniel Galli, commodities strategist at TD Securities, said, “In the short term, we still see downside risks in the market. Gold has significant room to fall, but it can still maintain the support formed during its bull market trend.” Daniel Pavilonis, broker at RJO Commodities, stated that if the current conflict persists, stocks and precious metals will continue to decline, and gold prices could even fall back to $4,200. Nicholas Vlapeller, head of global institutional markets at ABC Refinery, said that gold has held some important technical support levels on the weekly chart, and prices may rebound to around $4,800 per ounce after previously falling below this level. Carsten Munk, head of research at Julius Baer, said that in the case of tense Middle East situations, gold can only truly rise if there is a more obvious risk aversion sentiment in financial markets. CITIC Securities pointed out that after previous Middle East conflicts, the medium-term trend of gold prices still depends on the US dollar’s credit and liquidity factors. Looking ahead at this round of conflict, the continuation of loose liquidity and weakening US dollar credit are expected to further drive up gold prices. Optimism for new highs in gold prices is supporting record highs in gold sector stocks. Previously, Bank of America forecasted that gold prices could reach $6,000 per ounce within the next 12 months. UBS expects the target price for international spot gold to reach $6,200 per ounce in the coming months.