Gold Holds Firm Amid Rate Hike Concerns and Geopolitical Tensions

Rising interest rate expectations and a stronger U.S. dollar have put short-term pressure on gold prices, but geopolitical tensions and long-term structural buying have provided a counterbalance.

The Middle East conflict has become a primary driver of the market rally, with oil prices surging to around $107 per barrel after Houthi forces in Yemen launched attacks on Saudi Arabia's east-west pipelines. This intensified concerns about persistent inflation and led to higher U.S. Treasury yields, breaking through the 5% psychological barrier for the first time since October 2023.

Despite these bearish factors, gold has maintained its resilience at key levels, with spot gold trading narrowly around $4,300 per ounce. OCBC has raised its gold price forecast to $4,600 per ounce by December 2026.