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Gold stabilised to some extent on Tuesday after successive sessions in the red as markets continued to navigate increased uncertainty on the geopolitical direction in the Middle East.
While tensions and oil prices remain elevated, concerns about inflation and rising yields could continue to pose risks to gold.
At the same time, hopes of progress toward resolving the tensions could reduce the impact on the metal. As a result, the market could continue to react to new developments in the Middle East.
During the last three weeks, ETF flows remained negative, which could leave gold exposed to more downside if the trend continues. A decline in tensions and a retreat in Treasury yields and the dollar could help reverse the direction in investment flows and gold recover as it continues to find support from other factors.
Ongoing tensions in Eastern Europe and continued central bank accumulation could limit downside risk in the meantime, and could support a recovery over the long term.
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