New Delhi: Gold jumped above $4,550 an ounce, gaining about 4% in a single session on Wednesday after comments from US President Donald Trump suggested Iran had offered a “present” linked to energy flows through the Strait of Hormuz, reviving hopes of US‑Iran peace talks and prompting a rapid return to the metal after days of heavy selling. Talks could begin as early as Thursday, March 26, 2026, though Tehran had not responded to the overture at the time of reporting.
The market reaction was immediate: after nine straight sessions of losses, traders reversed course and pushed prices higher. The rally, however, comes against a much larger decline — gold remains nearly 20% below its January 2026 peak of $5,626 an ounce — a sharp correction that has forced investors to reassess the drivers of the market.
Bengaluru‑based strategist Naveen PMT described the move as “a massive swing,” blaming “classic headline risk volatility” as the crisis narrative shifted. He said the bounce reflected a change in positioning rather than renewed conviction, adding that “the market is shifting from war panic to peace optimism.” Short covering by traders who had bet against gold was a major factor, he said, alongside reports of a pause in strikes on Iranian energy infrastructure and a softer dollar outlook.
Technically, Naveen flagged $4,600 as the next test; a sustained move above that level could suggest the selloff has stabilised, while failure to hold gains might push prices back toward $4,100.
The episode has reignited questions about gold’s role as a safe‑haven. Dr. Renisha Chainani, Head of Research at Augmont, noted the recent moves may seem contradictory but follow a familiar pattern under stress. “Typically, geopolitical tensions support gold, but in the current cycle, liquidity dynamics are dominating,” she said. “During acute stress, investors sell their most liquid assets, like gold, to raise cash.”
Chainani pointed to inflation and interest‑rate dynamics as additional headwinds. Higher oil prices can fuel inflation and reinforce a “higher‑for‑longer” rate environment, she said, which raises real yields and pressures gold. On central bank behaviour, she described current inactivity as consolidation after aggressive accumulation over the past two years, stressing that “central banks remain net buyers” and that purchases are part of long‑term diversification away from the dollar.
Addressing India’s large household gold holdings — estimated in the source at roughly $5 trillion — Chainani said the metal serves multiple roles: store of value, cultural asset and emergency liquidity buffer. She argued the recent turbulence does not make gold a structural risk asset: once liquidity stabilises and macro conditions normalise, she said, gold typically reasserts its role as a hedge against inflation, currency debasement and systemic risk.
Original Source: https://www.ndtv.com/india-news/can-you-still-trust-gold-or-are-trumps-mood-swings-turning-it-into-a-trap-11262739#publisher=newsstand
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Publish Date: 2026-03-25 08:24:00
