Gold Continues to Fall, US-Iran Stalemate Raises Inflation Risks!
Gold prices weakened and ended with a weekly decline, snapping a four-week uptrend, as US-Iran maritime tensions escalated and prospects for peace talks weakened. Disruptions in energy supplies also contributed to maintaining inflation concerns.
Gold fell to around $4,670 an ounce on Friday (April 24th) and has fallen more than 3% over the week. The US and Iran both maintained a shipping blockade, while President Donald Trump ordered the US Navy to fire on ships laying mines in the Strait of Hormuz.
The US military also reportedly intercepted two oil supertankers attempting to evade traffic to and from Iranian ports. Meanwhile, Tehran reported attacking three ships throughout the week, keeping energy transit routes tense and sensitive to escalation.
The chances of Iran agreeing to additional face-to-face talks with the US are seen as being hampered by Trump's threats and aggressive social media posts, according to officials familiar with diplomatic efforts. This situation has put the market into cautious mode heading into the weekend as key risks suddenly rise.
Gold's weakness came after optimism about de-escalation briefly emerged when Trump extended an indefinite ceasefire. However, the approaching weekend blockade of Hormuz and volatility around the route pushed oil prices higher, heightening inflation risks and reducing the scope for expectations of a rate cap.
Energy supply disruptions increase the likelihood of central banks holding interest rates longer or even raising them, which is a drag on non-yielding gold. Fund manager Zhishui Investment Management believes gold is now moving with a "dual logic" between fading rate cut expectations and pessimism over Iran tensions, while investors tend to maintain large positions ahead of the weekend. Spot gold fell 0.4% to $4,677.83 (11.26 Singapore time) and silver fell 0.6% to $74.98, with the Bloomberg Dollar Index flat after rising 0.2% in the previous session.
5 key points (key takeaways):
- Gold headed for a weekly loss of >3%, breaking a four-week uptrend; price around $4,670/oz.
- The US-Iran maritime standoff escalates: both sides maintain a blockade, Trump issues an order regarding mines in Hormuz.
- The US intercepts two supertankers; Iran reportedly attacked at least three ships this week.
- The prospect of face-to-face talks is weakening, seen as hampered by Trump's threats and tough public communication.
- Higher oil prices raise inflation risks and reduce the likelihood of interest rate cuts, pressuring non-yielding gold; gold is down about 11% since the war began. (asd)
Source: Newsmaker.id
