Gold Moves Limited, Market Weighs Iran and Interest Rate Risks
Gold (XAU/USD) traded with limited movement as market participants weighed two opposing forces: rising geopolitical risks in the Middle East versus the resilience of the dollar and US bond yields.
War tensions involving Iran typically support safe-haven demand, but gold's response in this phase is not always linear. Markets are increasingly interpreting the conflict through the energy-to-inflation-to-interest rate expectations channel, so a surge in oil prices could trigger renewed inflation concerns and maintain high interest rate expectations for longer.
On the other hand, the dollar is supported by consistently solid US data and the assessment that the Fed is in no hurry to ease policy. When yields and the dollar remain strong, the opportunity cost of holding gold increases because the precious metal offers no yield, so gold tends to gain ground despite rising geopolitical risks.
Going forward, the market will closely monitor the movement of the DXY and US real yields, the direction of oil prices as a driver of inflation expectations, and headline developments related to the Strait of Hormuz and ceasefire talks. US activity and inflation data, along with signals from central bank officials, will also determine whether XAU/USD can maintain its current range or become more sensitive to changes in interest rate expectations. (Zaf)
Source: Newsmaker.id
