Gold rose over 1% on hopes of de-escalation in West Asia, supported by a softer US dollar.
Bullion remains down more than 13% this month, marking its worst monthly performance in over 17 years.
Diminishing expectations of US Fed rate cuts and elevated geopolitical uncertainty continue to pressure precious metals.
Gold inched higher on Tuesday on hopes of a de-escalation in the war in West Asia, but the precious metal is still poised to log its worst monthly performance in over 17 years as expectations of US interest rate cuts this year have diminished, Reuters reported. At its March policy meeting, the US Federal Open Market Committee (FOMC) held the benchmark Fed funds target range unchanged at 3.50–3.75%.
Amid a surge in crude prices and lingering geopolitical uncertainty, the US Federal Reserve is now unlikely to deliver rate cuts as previously anticipated.
2 March 2026
Get the latest issue of Outlook Business
Prior to the escalation in conflict, market participants were expecting two rate cuts of 25 basis points each this year to support signs of softening in the US labour market and mounting political pressure from the Trump administration.
On Tuesday, spot gold rose 1.1% to $4,561.68 per ounce as of 9:57 AM, while US gold futures for April delivery gained 0.7% to $4,590, according to Reuters.
Meanwhile, the US dollar eased, making dollar-denominated commodities such as gold more affordable for holders of other currencies. Analysts noted that gold prices found some support after US President Donald Trump hinted at the possibility of a resolution to the conflict in West Asia.
According to reports, Trump told his aides that he is willing to end the US military campaign against Iran, easing risk-off sentiment among investors. On Monday, the Wall Street Journal reported that Trump is prepared to halt the military campaign even if the Strait of Hormuz remains largely closed, leaving the complex task of reopening the critical oil transit route for a later stage.
Gold Set For Multi Decade Decline
Despite the uptick on Tuesday, both gold and silver have fallen more than 13% so far this month, marking their steepest monthly decline since October 2008. The decline has been driven largely by a stronger US dollar and fading expectations of monetary easing by the Federal Reserve. Gold typically performs well in a low-interest-rate environment, as it is a non-yielding asset and becomes relatively more attractive when borrowing costs fall.
However, traders have now largely priced out the likelihood of a Fed rate cut this year, according to the CME FedWatch tool, putting sustained pressure on bullion prices.
