Gold Moves Flat, Watch Out! This Is the Next Direction!
Gold held steady after two consecutive days of declines, as market participants weighed US President Donald Trump's latest threat to destroy Iran's infrastructure and the impact of a prolonged war on inflation and economic growth. In early trading, bullion hovered around US$4,660 per ounce.
The price stability came after gold fell more than 2% in the previous two sessions. Trump set a Tuesday deadline of 8 p.m. Eastern Time for a deal with Tehran, or the US would launch attacks on power plants and bridges, raising the risk of escalation in a conflict that has already tightened global energy supplies.
The war, now in its sixth week, raises the possibility that central banks will delay interest rate cuts, even opening room for further tightening, amid concerns about inflation stemming from energy supply shocks. In the US, the bond market maintained limited gains, with market participants expecting the Federal Reserve to hold rates until the end of the year.
High interest rates typically weigh on gold because the precious metal does not provide a yield. However, cost pressures from energy supply shocks are also seen as depressing economic growth, which could further strengthen demand for gold as a defensive asset, especially when economic indicators point to a slowdown.
Recent data showed the US services sector slowed in March, with the largest decline in employment since 2023 and a sharp rise in input prices. Meanwhile, gold has fallen about 12% since the Middle East conflict began in late February, as its safe-haven appeal weakened as investors liquidated to cover losses in other assets.
In geopolitical developments, Trump insisted the Strait of Hormuz must be reopened as part of a deal, while the maritime route remains largely closed to shipping since the conflict began. Spot gold edged up 0.2% to US$4,659.25 per ounce at 7:08 a.m. Singapore time; the Bloomberg Dollar Index was flat, while other precious metals' gains were limited.
5 Key Points:
- Gold stabilized around US$4,660/ounce after falling more than 2% in two sessions.
- Trump's ultimatum to Iran until Tuesday at 8:00 PM ET raises the risk of conflict escalation.
- Energy supply shocks are fueling inflation concerns, potentially delaying central bank interest rate cuts.
- High interest rates are weighing on gold, but the risk of slowing growth could support defensive demand.
- Gold has fallen about 12% since late February, partly due to investor liquidation, and has tended to move in the opposite direction to oil, which has rebounded. (asd)
Source: Newsmaker.id
