TLDR
- Gold climbed 0.4% to approximately $4,509/oz on Monday following a decline to $4,000/oz during the previous week
- Technical bounce expected with resistance levels identified at $4,624, $4,670, and $4,850/oz according to OCBC analysts
- Weekend Houthi offensive against Israel intensified concerns over broader regional warfare
- Iranian attacks on aluminum production sites in Bahrain and UAE drove aluminum prices up 5.4%
- Gold remains under pressure from elevated energy costs and dollar strength, down 13% month-to-date
Precious metals showed signs of recovery during Monday’s Asian trading session, with gold advancing 0.4% to settle at $4,509.51 per ounce. Gold futures similarly climbed 0.4%, touching $4,537.40 per ounce.
This upward movement follows a volatile trading week that witnessed spot gold plunge to $4,000 per ounce before staging a recovery toward $4,500 by week’s end.
Analysts at ANZ noted that bargain hunters emerged following what they characterized as one of the most significant gold selloffs in recent memory. Liquidations from gold-backed exchange-traded funds contributed to a monthly decline exceeding 15%.
Despite Monday’s gains, gold remains more than 13% lower for the month. The combination of U.S. dollar strength and rising crude oil prices continues to constrain the recovery momentum.
Brent crude surpassed $115 per barrel following Yemen’s Houthi forces’ entry into the conflict and their claim of conducting missile attacks against Israeli targets during the weekend.
Analysts at OCBC characterized gold’s recovery from recent lows as primarily technical in nature. While acknowledging that the relative strength index had rebounded from oversold conditions, they cautioned that this indicator alone doesn’t guarantee a durable uptrend.
Critical resistance points for spot gold have been established at $4,624, $4,670, and $4,850 per ounce. The bank warned that failure to maintain levels above these thresholds could result in renewed weakness.
Elevated energy prices present an additional headwind. OCBC noted these could sustain inflationary pressures, potentially driving Treasury yields upward and creating a more difficult landscape for gold investment.
Iran War and the Risk of Escalation
The conflict between the U.S.-Israel alliance and Iran reached a critical juncture over the weekend. Yemen’s Houthi movement, which receives backing from Iran, launched strikes against Israel, amplifying fears of regional conflict expansion and possible interruptions to crucial Red Sea maritime routes.
Tehran announced its readiness for a potential ground offensive by U.S. forces, citing intelligence about Washington deploying thousands of additional troops to the area.
President Trump indicated to journalists that diplomatic discussions with Iran were progressing favorably and suggested an agreement might be imminent. While declining to provide specific timing, he also cautioned about potential additional military action against Tehran.
The President had previously postponed a deadline for operations targeting Iran’s energy sector until early April.
Aluminum Markets Shaken by Iranian Strikes
Iran conducted operations against aluminum manufacturing installations in Bahrain and the United Arab Emirates during the weekend. Three-month aluminum contracts on the London Metal Exchange surged 5.4% to reach $3,461 per metric ton, marking a monthly increase exceeding 10%.
Aluminium Bahrain acknowledged that its operations were targeted and indicated it was conducting damage evaluations.
Emirates Global Aluminium reported that its Al Taweelah facility near Abu Dhabi experienced substantial damage from Iranian drone and missile attacks.
ANZ analysts cautioned that approximately 4 to 5 million tons of aluminum exports from the region face disruption risk, with limited alternative sources available to compensate for potential supply gaps.
Silver declined 0.9% to $69.09 per ounce, while platinum advanced 1.8% to $1,898.73 per ounce during Monday’s session.
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