Gold prices continue to fall and fall well below $5,000

This means that there is still no stronger demand for gold due to the war in the Middle East. After the gold price temporarily rose to just under $5,420 at the start of the US and Israeli attacks on Iran at the end of February, the price has come under significant pressure several times in the past two weeks.

High US dollar slows things down

“The price of gold is finding it difficult to live up to its role as a safe haven in times of crisis,” commented raw materials expert Carsten Fritsch from Commerzbank in a recently published study. Fritsch sees one reason for this in the exchange rate of the US dollar, which has risen significantly since the start of the Iran war. Since gold is traded in dollars on the global market, a stronger U.S. currency makes the precious metal more expensive, curbing demand.

In addition, expectations of interest rate cuts by the US Federal Reserve have recently fallen. Due to increased inflation expectations as a result of high oil prices, the financial markets are now only expecting one interest rate cut this year, after two interest rate hikes had been expected before the Iran war. The prospect that interest rates on government bonds, for example, could be higher than previously thought makes them more attractive compared to gold.