Gold Steady After US Dollar Weakens, Markets Watch for Middle East Signals
Gold prices remained relatively stable after the US dollar weakened following US President Donald Trump's comments that the war in the Middle East may be coming to an end. Bullion traded around US$5,140 per ounce in early trading, after falling 0.6% in the previous session. The US dollar index weakened by 0.1%, extending Monday's decline, while oil prices fell after a highly volatile session.
Any indication that Washington is willing to push for de-escalation could ease the pressure that has weighed on gold in recent days. Since the war began, Iranian attacks on energy infrastructure in the Persian Gulf region and the effective closure of the Strait of Hormuz to shipping have driven a rally in oil prices. This energy surge has heightened inflation concerns and, in turn, reduced the scope for the Federal Reserve to cut interest rates.
However, gold holdings remain challenging as the market adjusts to interest rate expectations. Daniel Ghali, senior commodity strategist at TD Securities, said the market has priced in the changing outlook for interest rate cuts, although there are signs that some players are "buying the dip" in the physical over-the-counter market. He added that the volume of purchases was still limited and within a range considered normal.
Fundamentally, higher borrowing costs typically act as a drag on non-yielding gold. At the same time, gold also acts as a source of liquidity when global equity markets are under pressure during ongoing conflicts. Despite volatile trade and restrained upward momentum, gold has still recorded a nearly one-fifth year-to-date gain, supported by global trade and geopolitical uncertainty, as well as the issue of the Fed's independence.
At 7:06 a.m. Singapore time, spot gold was little changed at US$5,139.67 per ounce. Silver rose 0.3% to US$87.25, while platinum and palladium fell slightly. The Bloomberg Dollar Spot Index weakened slightly after falling 0.2% in the previous session. (alg)
Source: Newsmaker.id
