Gold Trading Reminder: Gold prices surged 3.5% but experienced the worst month in 16 years! Is the easing of Iran's conflict or the dual impact of inflation and rate hikes going to kill the rally? Can the bulls still turn the tide?

Tong Guan Finance App News— On Tuesday (March 31), spot gold surged as much as 3.5%, topping out at $4,687 per ounce, and ultimately closed near $4,667. U.S.期 gold also jumped 2.7% to $4,678.60. This one-day strong rebound seems to be uplifting, but it cannot hide a harsh reality: gold prices have fallen 11.8% cumulatively in March, and are about to record the worst monthly performance since October 2008. In just one month, gold quickly went from the safe-haven favorite at the start of the geopolitical conflict to being a casualty of high interest rates and inflation expectations, while market sentiment has been swinging violently with the Trump administration’s “de-escalation signals” regarding military action toward Iran.

Middle East de-escalation expectations ignite a spark for a short-term rebound
On Monday, the Wall Street Journal broke the news that even though the Strait of Hormuz is still basically under blockade, President Trump is willing to end military action against Iran; the development instantly lit up market optimism.

U.S. Defense Secretary Hegseth, while warning that “the coming days will be decisive,” said that if Iran does not compromise the conflict could escalate, but investors were more willing to bet on “a ceasefire is near.”

The U.S. dollar index therefore fell 0.6% to 99.88. As a non-yielding asset, gold’s holding-cost pressure was temporarily eased, and with risk appetite recovering, gold notched the long-awaited big one-day gain.

Zaner Metals senior precious metals strategist Peter Grant said plainly: “The current uptrend in gold is encouraging; it stems from an improvement in market optimism regarding Middle East de-escalation.” However, he also reminded that to form a sustained uptrend pattern, stronger upward momentum is still needed. For now, this rebound looks more like a technical correction rather than a trend reversal.

Inflation ghosts and rate-cut expectations remain gold’s biggest ‘killer’
Despite the surge on a single day, gold still cannot escape a brutal correction in March. The core reason is the inflation chain reaction triggered by the Iran conflict pushing up oil prices. Over the past month, global oil prices have jumped more than 50%. U.S. retail gasoline prices broke above $4 per gallon for the first time in more than three years. Business costs surged, and consumers’ inflation expectations jumped from the median 4.5% to 5.2%, a new high since May 2025.

A high interest rate environment directly raises the opportunity cost of holding gold. The Federal Reserve previously, largely ruled out the possibility of a rate cut in 2026 due to war-driven inflation; even the market at one point priced a higher probability of rate hikes before year-end.

A similar analysis by analysts at BNP Paribas also confirms this logic for silver: in 2026, silver prices are expected to trade in a $65–$75 range, and in 2027, the physical market may shift to a supply glut. Since gold and silver are both precious metals, silver’s 20.4% monthly drop further highlights the vulnerability under dual pressure from weak industrial demand and constrained financial attributes.

Job data flashes red, and rate-cut expectations quietly warm back up
On the same day as the gold rebound, the U.S. Department of Labor’s JOLTS report showed that February job openings fell sharply by 358,000 to 6.882 million. The number of people hired declined to 4.849 million, the lowest level since the pandemic and since August 2014. Job losses were most severe in small and medium-sized enterprises and in jobs in accommodation and food services and manufacturing; the job openings rate fell from 4.4% to 4.2%.

Although the consumer confidence index unexpectedly edged up to 91.8, households visibly turned more cautious in their plans to buy major commodities in the future. The “jobs are hard to find” share in the labor market rose to the highest level since February 2021.

Michael Gapen, chief economist at Morgan Stanley, warned: “The ‘four horsemen’ indicators—hiring, layoffs, job openings, and the unemployment rate—suggest that even before the oil shock, economic conditions had already deteriorated.”

This run of weak data caused the interest rate futures market to quickly shift. On Tuesday, the market expected about 7 basis points of rate cuts in 2026; the previous day it had priced 10 basis points of rate hikes.

The yield on two-year Treasuries fell by 3.3 basis points, and the 10-year yield fell by 3.1 basis points. The yield curve showed a bull steepening move. The bond market has already started pricing in the logic that “high oil prices lead to demand destruction.” The “neutral employment growth” that Federal Reserve Chair Powell described earlier is now facing real downside risks, which could become gold bulls’ most powerful turnaround lever.

The long-term fundamentals remain rock solid
Short-term volatility is intense, but gold’s long-term narrative has not been broken. Goldman Sachs maintained an aggressive forecast of $5,500/ounce for gold by end-2026, while BMI gave a more steady target of $4,600 as the full-year average price.

The wave of de-dollarization, global central banks’ continued gold buying, and geopolitical uncertainty still provide underlying support for gold.

Peter Grant emphasized: “From a long-term perspective, the basic trend remains bullish. Key fundamental supports such as de-dollarization and central bank buying still exist.”

Even if the Trump administration tries to ease the conflict with Iran, it will still take time for the Strait of Hormuz to fully restore normal navigation. The risk of oil prices trading at high levels with inflation bouncing back will not disappear instantly.

Although the U.S. dollar rose 2.3% in the month—its biggest gain since July—its safe-haven attributes and the advantage of energy-exporting countries are being repriced amid uncertainty that “the conflict may become prolonged.”

Silver price action diverges; the precious metals sector awaits confirmation of direction
Spot silver jumped 7% on Tuesday to $75.67, but that cannot mask the grim 20.4% monthly decline. BNP Paribas predicted that silver prices in 2026 will trade in a $65–$75 range, and that pressure from excess supply will become evident in 2027. Silver has both monetary and industrial attributes. Against a backdrop of slowing demand in sectors such as semiconductors and solar power, its rebound strength is weaker than gold’s, which also indirectly confirms the market’s current disagreement over “a soft landing or a hard landing.”

Overall, gold is in a three-way tug-of-war: “short-term sentiment-driven rebound vs. mid-term inflation pressure weighing it down vs. long-term fundamentals remaining bullish.” Although March’s 11.8% monthly drop set a record, it has also released valuation pressure relatively fully. If, in the coming days, U.S.-Iran talks achieve substantive progress and the Strait of Hormuz reopens, a pullback in oil prices would quickly relieve inflation expectations, and gold could extend its rebound. Conversely, if the “conflict escalation” warned by Hegseth becomes reality, safe-haven buying may clash more intensely with the high interest rate environment.

In any case, the 2026 price range of $4,600–$5,500 has become an institutional consensus baseline. And the March nonfarm employment report to be released on Friday will be the most critical variable determining gold’s short-term fate. What investors most need to pay attention to now is not the 3.5% gain on a single day, but whether, in this “trio of war, inflation, and employment,” gold can truly upgrade from a “safe-haven tool” into a “trend-driven long” asset.

On Wednesday (April 1), in early trading in Asia, spot gold was range-bound near the highs and briefly refreshed the high since March 20 to $4,696 per ounce.

(Spot gold daily chart; source: YiHuiTong)

At 07:42 Beijing time, spot gold was quoted at $4,691.80 per ounce.

(Editor: Cao YanYan HA008)

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