Gold Prices Bounce Back After a Beating: Confident to Break Through US$5,000?
Jakarta, CNBC Indonesia - Gold prices rose nearly 2% on Wednesday, driven by a decline in oil prices that alleviated inflation concerns and reduced expectations for interest rate hikes. However, uncertainty surrounding the Middle East conflict persists.
According to Refinitiv, gold prices closed at US$4,505.06 per troy ounce on Wednesday (25/3/2026), up 0.7%.
This strengthening extended the gold rally, with a 2.2% gain over the last two days.
The rise also brought gold back to the US$4,500 per troy ounce level after it had fallen to US$4,400 over three days.
Gold prices eased slightly today. On Thursday (26/3/2026) at 06:28 WIB, gold was at US$4,499.23 per troy ounce, down 0.13%.
“Gold is currently experiencing a technical recovery and is also supported by optimism that the conflict involving Iran is starting to ease, which is also pressuring oil prices,” said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, to Reuters.
“We still need to see further declines in inflation concerns before considering the possibility of another US interest rate cut this year. If that happens, gold could potentially rise back to US$5,000,” he added.
Oil prices fell after reports emerged that the United States (US) had sent a 15-point proposal to Iran to end the war.
Pakistan has conveyed the proposal to Iran, and Pakistan or Turkey could potentially serve as locations for talks to de-escalate the conflict, according to a senior Iranian official to Reuters.
Meanwhile, the Pentagon is reportedly planning to send thousands of airborne troops to the Gulf region to give President Donald Trump more options for ordering a ground attack.
The decline in oil prices helps ease inflationary pressures, thereby reducing the likelihood of high interest rates persisting for long.
Although gold is known as a hedge against inflation, its appeal tends to wane in a high-interest-rate environment due to the increased opportunity cost of holding non-yielding assets.
Analysts at SP Angel stated that the recent volatility in gold prices reflects a massive surge in speculative investment flows throughout 2025.
“The recent price drop indicates a sharp exit of much of that capital. However, we see the trend of central bank reserve diversification continuing, with new players starting to buy in 2026,” they said.
Spot gold prices rose 64% over the past year and reached an all-time high of US$5,594.82 per ounce on 29 January. However, gold prices took a beating after the war broke out. Prices plunged 15% since the war erupted on 28 February.