Gold Steady Amid Strong Dollar and Surge in Oil Prices
Gold prices held steady early in the Asian session on Friday (March 13) after weakening in the past two sessions, as market participants weighed the strengthening US dollar and high oil prices amid the nearly two-week-long Middle East war. Bullion hovered around US$5,080 per ounce in early trading, having fallen more than 2% in the previous two sessions.
A tough tone remains prevalent in the conflict. US President Donald Trump and Iran's new supreme leader, Mojtaba Khamenei, both took firm stances on the 13th day of the war, which has effectively blocked shipping through the Strait of Hormuz and created the biggest disruption in oil market history. Meanwhile, oil prices continued their rise from their highest close since August 2022, while the US dollar index rose 0.5% on Thursday.
For gold, surging energy prices and rising inflation concerns have dampened expectations of interest rate cuts by the Federal Reserve and other major central banks. Hopes of easing were also dampened after the latest US jobless claims report showed new applications remained low, indicating a relatively solid labor market.
Additional pressure is coming from the bond market. US Treasury yields weakened on Thursday, pushing short-term yields to their highest level since August. The market now sees little chance of a rate cut at next week's Fed meeting, and only prices a roughly 70% chance of one happening this year. Higher borrowing costs are generally a drag on precious metals, as they offer no yield.
At 6:54 a.m. Singapore time, spot gold edged up 0.2% to US$5,089.13 per ounce. Silver rose 0.2% to US$84.04, platinum strengthened, and palladium weakened.
Source: Newsmaker.id
