Gold Under Slight Pressure: Safe, But Why So Weak?
Gold weakened today in the Asian session, returning to the US$4,480/oz area, after previously attempting to strengthen. Its movement reflects a market that remains "indecisive": geopolitical tensions have not subsided, but the inflation-interest rate path and the strengthening dollar remain restraining factors.
From a more "up-to-date" fundamental perspective, three variables are locking gold's direction: energy prices, the dollar, and yields. The dollar is holding steady around 99.18, while the 10-year US yield remains around 4.46%. The combination of a firm USD and high yields typically makes it difficult for gold to continue its rally because it offers no yield and becomes more expensive for non-USD buyers.
If geopolitical tensions remain the same (not drastically worsening, but not completely abating either), gold tends to move in a range-bound mode: it retains a "bid" as a hedge, but often loses ground to yield/dollar pressure as oil keeps the inflation narrative alive. On the energy front, Brent remains in the US$94-$95 range, high enough to keep the market sensitive to the risk of energy inflation.
Technically, intraday gold prices are currently near the pivot area. The nearest support is at US$4,475-$4,450 (a zone that has held back declines several times today). If this support is broken and risk-off pressure turns into a "USD-on/yield-on" zone, further downside opens up to US$4,400 and then the psychological area of US$4,350 (a zone that previously served as a rebound point).
In an upside scenario, gold needs a more "friendly" combination: a more decisive dollar weakening and a consistent decline in yields, or a geopolitical headline that significantly increases hedging demand without raising expectations of policy tightening. Technically, initial resistance is at US$4,500, followed by US$4,546-$4,550 (the area of the last daily peak). Above that, gold has room to test US$4,600.
So, "why is gold weakening despite geopolitical tensions?" The answer lies in the transmission channels: when tensions aren't escalating, the market focuses more on energy inflation and interest rates, which push up the USD/yield and pressure gold. What to watch today: Brent's movements, the direction of the DXY, and whether the 10-year yield starts to fall or rises again, as these three are the quickest to change gold's bias in stagnant geopolitical conditions. (asd)
Source: Newsmaker.id
