Gold steadies as March rout deepens

Gold edged higher on Tuesday but remained on course for its sharpest monthly decline since October 2008, as investors weighed a powerful mix of delayed hopes for US rate cuts, a surge in energy prices linked to the Iran war and a stronger dollar through much of March. Spot gold was up about 3.2% at $4,652.31 an ounce by Tuesday, yet still showed a monthly fall of 11.8%, a retreat that underlined how sharply the market’s mood has shifted since the start of the month.

The rebound on the final day of March suggested some bargain-hunting after heavy selling, but it did little to alter the wider picture. Gold, which usually benefits when geopolitical stress drives demand for safe assets, has struggled to hold that role this month because the war’s biggest market effect has been to push oil and fuel costs higher, reviving inflation fears and forcing traders to rethink the path of monetary policy. Brent crude has been heading for an unprecedented monthly jump, while average US gasoline prices have climbed above $4 a gallon for the first time since August 2022.

That energy shock has become central to the gold story. Since the war began on 28 February, disruptions around the Strait of Hormuz have shaken commodity markets and lifted concerns that inflation could stay above target for longer across major economies. A Reuters poll published on Tuesday showed the 2026 Brent forecast had been raised by nearly 30% from the previous month, the steepest increase on record in that survey, reflecting how seriously traders now view the supply risk.

For bullion, the consequence has been uncomfortable. Higher oil prices can support gold when they stir broader anxiety, but they can also hurt it when markets decide central banks may need to keep borrowing costs higher or even tighten policy further. That second effect dominated March. Kansas City Fed President Jeff Schmid warned on Tuesday against complacency on inflation, saying oil-driven price pressure risked spilling beyond headline inflation. Fed Governor Lisa Cook had also said last week that the balance of risks had shifted towards inflation because of the Iran war.

Markets have therefore pulled back from expectations that the Federal Reserve would move quickly towards lower rates. That matters because gold offers no yield, making it less attractive when interest-bearing assets promise stronger returns. Even where policymakers are not openly calling for tighter settings, the rise in energy costs has made an easy near-term pivot to lower rates look much less certain than it did before the war. In Europe, inflation accelerated to 2.5% in March, above the European Central Bank’s target, with energy prices rising 4.9%, reinforcing the view that the inflation problem is no longer fading cleanly.

Currency moves have added another layer of pressure. Although the dollar weakened slightly on Tuesday, it was still heading for a monthly gain, raising the cost of gold for buyers using other currencies. The greenback has regained some safe-haven appeal during the conflict, and analysts have noted that, unlike some earlier geopolitical scares, this episode has favoured the dollar more consistently than bullion. That shift has reduced one of gold’s traditional advantages during periods of global stress.

Still, the sell-off has not erased the broader bullish case that had built over the past year. World Gold Council data published in January showed total gold demand, including over-the-counter activity, exceeded 5,000 tonnes in 2025 for the first time, helped by heavy investment flows and continued official-sector buying. The same data showed central banks remained significant buyers, with Poland leading reported purchases last year. That longer-term support helps explain why some analysts still see the March drop as a violent correction rather than a structural break in the market.

Tuesday’s price action across the wider precious-metals complex pointed in the same direction. Silver rose 6.7% to $74.64 an ounce, platinum gained 3.1% to $1,958.05 and palladium added 5.2% to $1,479.25, though all three were also headed for monthly losses. The broad lift suggested that traders were selectively returning after a month of liquidation, even as macroeconomic conditions remained hostile.

Political signals also played a part in the late bounce. Investors drew some relief from signs of possible de-escalation after President Donald Trump said he was willing to end military action against Iran, though officials also warned that escalation could still follow if Tehran failed to negotiate. That left gold caught between two opposing impulses at the end of the month: support from lingering geopolitical danger and pressure from the inflation-and-rates shock that danger has unleashed.