Gold prices traded flat entering a fifth day of record highs of $5,100 amid ongoing geopolitical conflict in the Middle East that should provide support for safe-haven assets.
At 8.30 am, gold prices were at $5,129, down 0.14% since it opened early Tuesday in Asian trading.
US President Donald Trump hinted that the Iran war may end soon as the conflict in the Middle East entered its 11th day.
However, the Strait of Hormuz remains effectively closed, affecting the flow of global energy supplies. This situation has forced several major producers in the Persian Gulf, including Saudi Arabia, to reduce their oil production.
Uncertainty over the ongoing conflict continues to drive investors to seek safe-haven assets. In this situation, demand for gold is expected to remain high in the near term.
At the same time, the war in the Middle East has also sparked concerns about inflationary pressures in the United States. The rising risk of inflation could cause the Federal Reserve (Fed) to keep interest rates high for a longer period.
A high interest rate environment usually puts pressure on gold because the precious metal does not offer the same returns as other yielding assets.
For now, the Fed is expected to keep interest rates on hold at its next meeting scheduled for March 17-18. Most economists expect the next interest rate cut to occur only around June or July 2026.
Meanwhile, the market is now awaiting the US Consumer Price Index (CPI) inflation data for February, which will be released later on Wednesday.
Headline CPI is expected to increase by around 2.4% year-on-year in February, while core CPI is forecast to rise to 2.5% over the same period.
If inflation data shows a higher-than-expected reading, it has the potential to strengthen the US dollar and at the same time put pressure on commodity prices, especially gold.
