Gold Holds at $5,200, Market Eyes CPI
GGold prices edged higher in the latest session, holding around US$5,200 per ounce, reflecting a combination of safe-haven flows and shifting inflation sentiment. Amid the ongoing escalating US-Israel-Iran conflict, investors continue to view gold as a safe haven during high geopolitical tensions.
However, gold's rally this time was subdued due to a major limitation: easing inflation concerns. This was due to previously soaring oil prices beginning to weaken after news emerged that the IEA proposed a large-scale release of oil reserves to contain energy prices. When inflationary pressures are perceived to be easing, the market tends to reduce the need for aggressive gold hedging.
Another factor influencing gold's direction is US interest rate expectations. The market is now awaiting clues as to whether inflation is truly tapering off or is resurfacing due to the energy effect. Therefore, investors are focused on the release of the CPI and the Fed's preferred inflation (PCE) figures, which will reshape monetary policy projections—and ultimately determine whether gold receives additional support or remains subdued.
On the geopolitical front, risks remain high as conflict has disrupted vital energy routes, including the dynamics surrounding the Strait of Hormuz. As long as news of war and supply disruptions persists, gold typically remains "supported" by demand for safe-haven assets, although it remains vulnerable to corrections if market sentiment suddenly improves or the dollar strengthens.
Meanwhile, energy commodity markets remain volatile. Today's slight decline in oil reflects the tug-of-war between supply risks (which support prices) and the discourse on reserve release (which depresses prices). Oil's direction is important for gold because it influences inflation expectations: a sharp rise in oil, heightened inflation fears, diminishing the likelihood of interest rate cuts, could hold gold back; conversely, a decline in oil, fears of lower inflation, could allow gold to rise more freely if geopolitical risks remain high.
Looking ahead, as long as geopolitical tensions persist, gold's bias is likely to remain strong with high volatility. In the short term, gold's movement will be largely determined by the CPI/PCE: if inflation is lower than expected, gold will break through the upper area and strengthen its uptrend. However, if inflation is higher, the dollar and yields could strengthen, making gold vulnerable to a correction from its peak. (asd)
Source: Newsmaker.id
