Analysts say yellow metal failed as a safe haven amid rising US yields and shifting rate expectations, with investors favoring oil volatility and dollar strength.
DUBAI — Gold prices held steady in Dubai on Wednesday morning, stabilizing after a volatile month that saw the precious metal shed nearly Dh73 per gram in March despite escalating conflict in the Middle East.
Data from the Dubai Jewellery Group showed 24K gold trading at Dh563.50 per gram, up marginally from Dh563.25 at Tuesday’s close. Other variants also saw slight gains, with 22K at Dh521.75, 21K at Dh500.25, 18K at Dh428.75, and 14K at Dh334.50 per gram.
The modest uptick follows a turbulent March during which gold lost more than Dh100 per gram at one point before staging a partial recovery. The metal ultimately closed the month down nearly Dh73 per gram, defying expectations that prolonged regional conflict would drive safe-haven demand.
Globally, spot gold rose 0.63 per cent to $4,677 per ounce on Wednesday, while silver slipped 0.5 per cent to $74.28.
Safe-Haven Status Falters
Ahmad Assiri, research strategist at Pepperstone, said gold’s inability to act as a traditional safe haven throughout March signals a fundamental shift in the global macroeconomic landscape.
“Despite peak geopolitical tensions, the traditional fear trade was completely overshadowed by a surge in US Treasury yields, which supported the dollar and forced a painful downside repricing of the yellow metal,” Assiri said.
He noted that market sentiment shifted as investors began factoring in higher inflation expectations, leading to a reversal in anticipated monetary easing. “Investors ditched the idea of rate cuts in favor of potential hikes. For gold, an asset that provides no yield, this hawkish-leaning environment acted as a headwind for capital flows.”
Technical Damage and Competing Assets
Assiri added that technical factors intensified selling pressure after gold fell below the key $5,000 per ounce level—previously viewed as a floor—as well as its 50-day moving average.
“The metal lost its luster to the energy complex, where extreme volatility offered a more aggressive vehicle for speculative capital,” he said. “In a month defined by risk, the market chose the yield of the dollar and the volatility of oil over the safety of gold.”
The analysis underscores a shifting dynamic for the precious metal, which has historically been viewed as a hedge against geopolitical uncertainty. With US monetary policy expectations pivoting and energy markets capturing investor attention, gold’s traditional safe-haven role appears to have been temporarily sidelined.
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