Gold and Silver Edge Higher Amid Geopolitical Tensions and Hawkish Fed

Gold and silver finished modestly higher on Thursday, with traders largely in wait-and-see mode as geopolitical headlines out of the Middle East compete with shifting interest-rate expectations.

• April gold last traded up $8.80 at US$5,018.00/oz
• March silver last traded up $0.422 at US$78.01/oz

What’s moving the market?

1) Geopolitical risk back in focus
Markets are monitoring the US military build-up and escalating rhetoric around the United States–Iran situation, with reporting from Axios and CNN flagging the potential for near-term escalation. In periods of heightened uncertainty, precious metals can attract support as investors reassess portfolio risk.

2) Fed minutes lean more hawkish than expected
Minutes from the January meeting of the Federal Open Market Committee indicated policymakers remain concerned about inflation, with some participants suggesting rates may need to rise further if inflation stays above target. A more hawkish rate outlook is typically a headwind for non-yielding assets such as gold and silver.

3) Outside markets mixed for metals

• The US dollar index was slightly firmer, generally a mild negative for metals priced in USD.
• Crude oil traded higher, near an eight-month high around US$66.50/bbl, potentially reinforcing inflation expectations.
• The 10-year US Treasury yield held near 4.1%, with higher yields tending to weigh on precious metals.