Gold Edges Lower in Early Asian Trading as Inflation and Dollar Pressure Safe-Haven Value

TradingKey - In early Asian trading on March 6, spot gold ( XAUUSD) maintained a range-bound downward trend, currently trading near $5,074 per ounce.

Reviewing Thursday's market action, gold briefly surged after the open due to the escalation of Middle East tensions but soon reversed course, erasing all early-morning gains.

As the Middle East conflict entered its sixth day, oil prices surged and inflation expectations resurfaced. Theoretically, gold should have been the preferred safe-haven asset, yet it faced double pressure from a strengthening U.S. dollar and soaring Treasury yields, which nearly neutralized its safe-haven status.

The oil price and inflationary pressures triggered by the Middle East conflict are presenting a double-edged sword effect. In the short term, higher U.S. dollar and Treasury yields are directly bearish for gold; however, in the long run, rising inflation expectations will build a solid floor for gold prices.

Notably, the Chicago Mercantile Exchange (CME) just announced an increase in the initial margin requirement for COMEX 100 gold futures from 8% to 9%, while the initial margin for COMEX 5000 silver futures was simultaneously raised from 15% to 18%.

At the same time, spot silver ( XAGUSD) rose slightly by 0.21% to $82.07.