Gold Gains Limited, Energy Inflation Restrains Rally
Gold prices rose in Asian trading on Friday (March 13th), but were still headed for a second consecutive weekly decline as markets assessed the risk of energy-driven inflation remaining high due to the US-Israel war in Iran. The daily gains came as the dollar and oil halted their gains after the US announced additional exemptions for Russian crude to cushion the supply shock from Iran.
Spot gold rose 0.6% to US$5,109.46/oz, while gold futures fell 0.3% to US$5,111.84/oz. On a weekly basis, spot gold is estimated to have fallen by around 1.2%, remaining in the US$5,000–US$5,200/oz range since the war began, and is still struggling to recover from its record drop near US$5,600/oz in late January.
Safe-haven support from geopolitics was partly offset by shifting interest rate expectations, as markets worry that high oil prices could keep global inflation more sticky and push central banks to tighten for longer. This has led the market to further reduce expectations of an imminent interest rate cut, with the Fed widely expected to hold rates at its meeting next week.
The next focus will be the release of US PCE inflation for clues on policy direction, although the January data is considered insufficient to capture the impact of the war on energy. In other metals, spot silver rose 0.7% to US$84.3275/oz and spot platinum rose 0.5% to US$2,143.21/oz.
Markets are watching: oil's direction following the supply policy (including the exclusion of Russian oil), dollar and yield movements, and how PCE shapes interest rate pricing leading up to the Fed meeting. (alg)
Source: Newsmaker.id
