PRECIOUS-Gold jumps over 3% on dip-buying as investors track Middle East tensions
By Anushree Mukherjee
March 27 (Reuters) - Gold prices surged more than 3% on Friday on dip-buying after a pullback earlier this week, while investors looked for signs of de-escalation in the Middle East conflict.
Spot gold XAU= added 2.6% to $4,491.78 per ounce as of 1:45 p.m. ET (1745 GMT) after rising as much as $4,554.39 earlier in the session. U.S. gold futures GCcv1 for April delivery settled 2.7% higher at $4,492.5.
"The recent selloff created a really good opportunity because the market sold off... prices went below the 200-day moving average...this is an incredible time to buy gold," said Daniel Pavilonis, senior market strategist at RJO Futures.
Spot gold touched a four-month low of $4,097.99 on Monday.
"We're going to see a slow grind higher over the next couple of weeks. And then if this Iranian situation could kind of move past us, we have a pretty prime opportunity to be risk on," Pavilonis said.
Oil prices held above $110 per barrel despite U.S. President Donald Trump extending a deadline for Iran to reopen the Strait of Hormuz after Tehran rejected a 15-point U.S. proposal to end the fighting. O/R
The war, now in its fourth week, has spread across the Middle East, hitting the global economy with soaring energy and fertilizer prices that have fueled inflation fears.
Rising inflation has shifted the Federal Reserve outlook toward potential rate hikes, which typically weigh on gold by increasing the opportunity cost of holding the non-yielding asset.
Traders have fully priced out U.S. rate cuts in 2026, according to CME Group's FedWatch Tool, compared with expectations for two cuts before the war began.
However, Commerzbank raised its gold price forecasts, lifting its year-end target to $5,000/oz from $4,900, saying the recent pullback is unlikely to be sustained.
The bank expects the Iran war to end in the spring, which could temper current expectations for U.S. rate hikes. It sees the Federal Reserve resuming rate cuts later this year, lowering rates by about 75 basis points by the middle of next year.
Spot silver XAG= rose 2.2% to $69.54 per ounce. Spot platinum XPT= gained 2.3% to $1,868.89, while palladium XPD= rose 1.8% to $1,377.25.
