Gold Rises Slightly, Inflation Risks Hold Back
Gold prices rose in Friday trading, but remained on track for their first weekly decline in more than a month. A stronger US dollar and rising US bond yields were the main factors weighing on gold, although the geopolitical risk premium from the Middle East war continued to provide support.
Bullion briefly rallied by around 1.2% and broke through $5,100 an ounce, but is still down nearly 3% on the week. The US dollar's 1.3% gain this week has made gold more expensive for non-USD buyers, while falling US bond prices have pushed yields to multi-week highs, adding pressure on non-unbalanced yield assets like gold.
These dynamics have fueled a surge in energy prices due to the US-Israel war with Iran, raising inflation concerns and leading market participants to reduce expectations for a Fed interest rate cut. The swap market is now pricing in only 34 basis points of interest rate cuts by year-end, down from around 60 basis points at the end of last week—a shift that has strengthened the dollar and held back gold.
On the geopolitical front, markets remain nervous as the conflict enters its seventh day. Iran has reported launching missile and drone attacks on several points in the Gulf region, including an incident that hit a refinery in Bahrain, while Israel continues airstrikes on Tehran and the US suspends operations at its embassy in Kuwait. Security disruptions also increase risks to strategic energy routes, including the Strait of Hormuz, which is reportedly severely disrupted.
Amid the turmoil, a widespread sell-off in global stock markets has led some investors to use gold as a source of liquidity to meet margin calls or close other positions. At the same time, renewed concerns about institutional popularity have emerged, following reports that some central banks may release some gold reserves. For example, the central bank of Poland—reportedly one of the largest buyers—is said to be considering selling gold to help finance protection spending.
In recent trading, spot gold rose about 1% to $5,130.42 per ounce during the Asian session. Silver also strengthened about 1.9% to $83.80, while platinum and palladium also recorded gains. Going forward, gold's direction will be determined by the tug-of-war between geopolitical safe-haven support and macroeconomic pressures stemming from a strong dollar, high yields, and concerns about energy inflation. (asd)
Source: Newsmaker.id
