Gold Weakens Amid Rising US Dollar Strength
Gold started the new week on a weaker note, though there was no follow-through, bouncing back above $4,600.
Inflation concerns reinforced bets on higher interest rates globally and boosted the precious metal.
The USD maintained its bullish bias and proved another factor putting pressure on bullion.
Gold (XAU/USD) struggled to capitalize on Friday's modest recovery from around $4,550 and started the new week on a weaker note. This marked a second consecutive day of negative movement and was supported by the prospect of higher interest rates globally, which tends to include the yield-prohibitive yellow metal. Furthermore, a moderate strengthening of the US Dollar (USD) proved another factor putting pressure on the commodity, although the lack of further selling prompted bearish traders to exercise caution.
Investors now appear convinced that rising energy prices fueled by the war will revive inflationary pressures and force major central banks, including the US Federal Reserve (The Fed), to adopt a more hawkish stance. In fact, crude oil prices rose to a nearly four-week high on Monday in response to US President Donald Trump's threat to target Iranian power plants and bridges if the Strait of Hormuz was not reopened by Tuesday. Tehran also put forward new conditions, stating that transit through the air route could resume if some revenue was allocated to compensate Iran for war-related damage.
Furthermore, Ali Akbar Velayati, an adviser to Iran's new Supreme Leader Mojtaba Khamenei, warned that the resistance front could target the Bab el-Mandeb Strait in the Red Sea—another critical point. This raises the risk of further disruption to global trade routes and continues to support high crude oil prices. Meanwhile, the upbeat US Nonfarm Payrolls (NFP) report released on Friday signaled a resilient labor market and raised speculation that the Fed will maintain high interest rates for an extended period to combat inflation. This outlook, in turn, benefits the USD, contributing to the selling sentiment surrounding gold prices. (asd)
Source: Newsmaker.id
