Gold prices extended their decline for a third consecutive trading session on Wednesday, with Comex gold futures settling 1.02% lower at $4,545.20 per troy ounce, marking the weakest close since March 30. The precious metal faced headwinds from a combination of Federal Reserve rate policy uncertainty and heightened geopolitical tensions stemming from the ongoing conflict with Iran.
Spot gold touched a one-month low during the session, sliding 1% to $4,550.39 an ounce by late morning. The broader precious metals complex also suffered, with silver falling 1.6% to $71.95, platinum dropping 2.1% to $1,900.11, and palladium losing 1.6% to $1,436.86. The sell-off was driven by a strengthening U.S. dollar and rising Treasury yields, which reduced gold's appeal as a non-yielding asset.
Brent crude oil prices hovered near $119 per barrel, while U.S. crude climbed above $107, exacerbating inflation concerns. The Federal Reserve left its target interest rate unchanged at 3.5% to 3.75%, but noted that inflation remains elevated, partly due to the recent surge in global energy prices. The central bank's cautious stance has kept traders on edge, as expectations of prolonged higher rates diminish gold's attractiveness.
Geopolitical risks from the Iran war added another layer of complexity. The Strait of Hormuz remains closed indefinitely, and the U.S. naval blockade around Iranian ports shows no signs of easing. Diplomatic efforts are underway, but any breakthrough could reduce the risk premium embedded in gold prices. Conversely, a prolonged blockade would keep inflation fears alive and maintain pressure on the metal.
According to the World Gold Council, global gold demand rose 2% year-on-year in the first quarter to 1,231 metric tons. In value terms, this represented a record $193 billion, driven by strong bar and coin buying, which offset sluggish jewelry sales and quieter ETF flows. Notably, India's gold investment demand surpassed jewelry buying for the first time ever in the March quarter, a trend the World Gold Council expects to continue.
Market participants are closely watching Federal Reserve Chair Jerome Powell's press conference scheduled for 2:30 p.m. EDT, as well as oil price movements and any developments from Iran. Gold's near-term trajectory remains highly sensitive to shifts in market anxiety and inflation expectations, with the metal caught between haven demand and the drag of rising rates.
