Gold Held Back! Hormuz and US Yields Limit Recovery
Gold prices (XAU/USD) remained under pressure below $4,800 during the Asian session on Monday (April 20), despite attracting buyers following a bearish gap opening. Gold briefly touched the $4,737–$4,738 area (a one-week low) before recovering modestly.
Support for the US dollar came from escalating US-Iran tensions over the Strait of Hormuz, which boosted demand for safe-haven assets and weighed on the precious metal. This kept gold's recovery from a strong rebound, although the USD briefly retreated from its one-week peak.
Meanwhile, a sharp rally in oil prices reignited inflation concerns and pushed US government bond yields higher. This increase in yields hampered non-yielding gold, keeping intraday gains at around $4,815.
Geopolitical tensions were triggered by the US Navy's interception and seizure of an Iranian-flagged cargo ship in the Gulf of Oman as part of a blockade. Iran considers this move a violation of the ceasefire and re-closes the strategic waterway after a brief respite, while President Donald Trump stated that the blockade of Iranian ports will continue until a peace agreement is reached.
However, the dollar's room for strengthening is considered limited as the market sees a diminishing chance of a Fed interest rate hike. The CME FedWatch tool indicates a roughly 40% chance of a rate cut by the end of the year, which has helped curb USD strength and provided a cushion for gold. With no significant US data releases, gold and dollar movements are expected to depend heavily on the latest developments in the US-Iran issue.
5 key points:
- Gold remains below $4,800; it briefly fell to $4,737–$4,738 before recovering slightly.
- US-Iran tensions and the risk of Hormuz support the USD and pressure gold.
- A surge in oil fuels inflation concerns, pushing US yields up, limiting gold's gains to around $4,815.
- The US seizes an Iranian vessel; Iran considers this a ceasefire violation and re-tightens access, while Trump insists the blockade will continue until a deal is reached.
- Expectations of a more dovish Fed (FedWatch estimates suggest a 40% chance of a rate cut by the end of the year) are holding back USD gains and providing limited support for gold; market focus remains on US-Iran headlines. (asd)
Source: Newsmaker.id
