Gold Prices Hold, Dollar Weakens, But Bullish Strength Remains Limited
Gold prices held above US$4,750 per ounce on Wednesday, supported by a weaker US dollar and easing oil prices after President Donald Trump announced the extension of the ceasefire with Iran. Reuters reported that spot gold rose 0.9% to US$4,754.89 per ounce, while US gold futures rose 1.1% to US$4,772.60.
This rise follows sharp pressure in the previous session, when gold fell more than 2% due to a stronger dollar and rising US bond yields. The weakening dollar in the latest session gave gold room to recover, as the precious metal became cheaper for buyers holding other currencies. However, this support was not enough to generate truly strong bullish conviction.
The market is still assessing the geopolitical situation in the Middle East with great caution. Reuters noted that the ceasefire extension was unilaterally announced by Trump, and it is unclear whether Iran or Israel will fully support the move. This uncertainty has prevented market players from aggressively pushing gold, as any change in the direction of the conflict could quickly shift the dollar, oil prices, and interest rate expectations.
On the other hand, Kevin Warsh's comments, emphasizing the Fed's independence and not committing to a rate cut, also limited gold's upside. As long as the market still sees the possibility of US interest rates remaining high for longer, gold's rally tends to be restrained, even if the dollar weakens. This means gold still has a foothold, but has not yet found a strong enough catalyst to build a solid uptrend.
Cause:
The US dollar weakened, providing support for gold prices.
Oil prices fell after the extension of the US-Iran ceasefire was announced, helping to alleviate some inflationary pressures.
Gold rebounded after a sharp correction of more than 2% in the previous session.
The market remains uncertain about whether the ceasefire will actually hold, so safe-haven interest remains, but it is not yet strong enough to fuel a major rally.
High US interest rate expectations limit gold's upside. (Zaf)
Source: Newsmaker.id
