Gold Steady Awaiting US Data, Here's Where to Go Next!
Gold prices (XAU/USD) remained slightly negative on Thursday in the Asian session. However, selling pressure did not persist, and gold appeared to hold below the $4,700 area after a corrective decline from a three-week high.
Market sentiment remains sensitive to the perceived fragile resilience of the US-Iran ceasefire. This condition tends to maintain demand for the US dollar (USD) as a reserve asset, thus acting as a drag on commodities, including gold.
On the other hand, escalating tensions in the region complicate the direction of risk. Israel reportedly launched a major airstrike in Lebanon, arguing that the ceasefire did not cover that region due to Hezbollah's role, while the White House also agreed that Lebanon was not included in the two-week ceasefire agreement between Iran and the US.
In response, Iran again blocked shipping traffic through the Strait of Hormuz and threatened to withdraw from the ceasefire if Israeli attacks continued in Lebanon. These dynamics limited market optimism while supporting the USD, which in turn limited room for gold prices to rise.
On the monetary policy front, the minutes of the March 17-18 FOMC meeting indicated a "higher for longer" approach, with Fed officials in no rush to cut interest rates amid rising inflation risks stemming from potential energy price shocks in the Middle East. However, the same minutes also signaled that there was still room for a rate cut, although the timing was unclear, thus limiting aggressive USD strengthening.
The market is now holding back ahead of crucial US inflation releases, particularly the PCE index, the Fed's preferred inflation gauge, and the CPI data, which is said to be an additional benchmark for policy expectations. The combination of geopolitical factors and interest rate trends has made traders cautious before taking a firm stance on XAU/USD.
5 Key Points
- Gold traded slightly lower, but there has been no further selling and remains below $4,700.
- Skepticism over the US-Iran ceasefire is maintaining demand for the USD and curbing gold's gains.
- Tensions are widening due to attacks in Lebanon, while Lebanon is said to be excluded from the ceasefire agreement.
- Iran closed the Strait of Hormuz and threatened to withdraw from the ceasefire if escalation continues, adding to the intimidation.
- FOMC minutes confirmed a tighter stance for longer, but signals of a rate cap limited USD gains; market focus shifts to US PCE and CPI. (asd)
Source: Newsmaker.id
