Gold Falls Sharply, Dollar Strengthens Amid Threat of Iran Escalation
Gold prices weakened sharply on Thursday, halting a four-day rally that had previously taken the precious metal to a two-week high. Selling pressure emerged after gold briefly touched around US$4,800 during the Asian session, then reversed downwards amid a strengthening US dollar.
Market sentiment worsened following a speech by US President Donald Trump, which was seen as dampening hopes for a de-escalation in the Iran conflict. Trump stated that Iran would be hit "very hard" in the next two to three weeks if no deal was reached, increasing investor caution and strengthening the dollar's role as a hedge.
Trump also stated that Iran's energy infrastructure remained a potential target. Meanwhile, reports that the United Arab Emirates was pushing for military action to reopen the Strait of Hormuz and lobbying for a UN Security Council resolution to authorize related operations added to market concerns about escalation in the region.
These developments triggered a sharp rally in oil prices, which again raised inflation risks. The oil rally reinforced speculation that the US Federal Reserve could maintain a tighter stance, including the possibility of interest rate hikes, further pressuring non-yielding assets like gold.
Expectations of higher interest rates also lifted US Treasury yields, further supporting the dollar. The combination of a stronger dollar and rising yields typically acts as a headwind for gold, as it increases the opportunity cost of holding non-interest-bearing assets.
In Thursday's session, gold was reported to have fallen around US$150 from its peak in Asian trading, reflecting persistently high volatility. Price movements are expected to remain sensitive to geopolitical news, particularly any developments related to energy access and security in the Middle East.
Looking ahead, market attention will also be focused on the US Nonfarm Payrolls (NFP) data on Friday. However, given that gold is currently driven primarily by geopolitical dynamics and inflation expectations, the direct impact of the employment data is potentially limited. Against this backdrop, the market is likely to be cautious about assessing whether gold's recovery from the US$4,100 area, a four-month low reached last week, still has room to continue. (asd)
Source: Newsmaker.id
