Overnight, gold remained relatively stable despite conflicting geopolitical crosscurrents, balancing reports of a potential 45-day ceasefire against President Trump’s escalating threats to force the reopening of the Strait of Hormuz.
More broadly, however, the metal remains entrenched in a corrective phase, weighed down by the persistent pressure of elevated US 10-year real yields that continue to hover near the 2% threshold. With the Middle East conflict yet to see any definitive de-escalation, the immediate outlook suggests a period of range-bound price action with an upside skew. However, any meaningful breakout remains heavily contingent on further geopolitical shifts. In the near term, gold is likely to oscillate within the USD 4500-5000. Until real yields undergo a meaningful retreat or the dollar exhibits sustained weakness, gold's recovery potential will remain structurally constrained.
Meanwhile, silver continues to exhibit relative underperformance, evidenced by the gold/silver ratio widening to 64.9 from sub-60 at the end of February, prior to the onset of the conflict. This divergence likely reflects an underlying weakness in industrial metals demand, as the oil shock threaten to weigh on global economic output.
In the immediate term, Trump’s deadline for Iran to cut a deal looms (Wednesday, 8am SGT). Beyond that, the release of the FOMC minutes and the March CPI report will serve as key catalysts.
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