Gold assets are seen bouncing back above the $4,550 level after suffering a sharp drop since early March, which was the worst weekly performance since 1983.
At 9 am, the price of gold was at $4,556, up 1.82% since it opened in early trading Wednesday in the Asian session.
Bloomberg reported on Tuesday that US President Donald Trump hinted that Iran had offered a 'gift' as a gesture of goodwill in the negotiations that are allegedly underway to end the 25-day conflict.
The conflict continues to pressure global markets, even as Washington simultaneously increases its military deployment in the Middle East.
This development comes as Iran's senior military adviser, Mohsen Rezaei, stressed that the war will not stop until Iran receives full compensation for the damage suffered.
This statement reflects that the negotiations are still far from reaching a settlement, thus maintaining a high level of geopolitical uncertainty.
In this environment, demand for gold as a safe haven asset has the potential to increase in the near term. The ongoing tensions in the Middle East have traditionally prompted investors to turn to hedge assets to protect portfolio values from market risk.
However, the impact of the conflict on energy prices also plays a significant role. Rising oil prices could sustain global inflationary pressures, reducing expectations of a rate cut by the US Fed.
This higher interest rate scenario tends to support demand for government bonds, which offer fixed returns.
This situation indirectly puts pressure on gold, which offers no yield. A shift in investor interest to fixed-income instruments could limit the precious metal's upside potential, even as geopolitical risks remain elevated in global markets.
