Gold Selloff, Dollar Strengthens and Yields Pressure
Gold weakened on Tuesday (April 28th) as the market assessed that protracted US-Iran negotiations risked keeping the Strait of Hormuz closed for longer, prolonging energy supply shocks and raising inflation risks. Bullion briefly fell as much as 2.7% to well below US$4,600/oz before paring some losses after President Donald Trump said Iran had asked the US to lift its naval blockade of the vital waterway.
Iran had previously signaled its openness to an “interim deal” to open Hormuz in exchange for an end to its blockade of Iranian ports, while postponing nuclear negotiations. However, Iran also wanted to retain some control over shipping in the strait, which Washington considered unacceptable. With oil prices remaining high and the war entering its eighth week, concerns about energy-driven inflation have pushed the market back into pricing in a scenario of tighter interest rates for longer, or even a possible rate hike if price pressures persist—conditions that typically weigh on non-yielding gold.
This week's focus shifts to a series of central bank decisions in the US, Europe, the UK, and Canada. The Bank of Japan (BOJ) has held interest rates at 0.75%, with a split vote increasing the likelihood of a June hike. As of 3:18 p.m. in New York, spot gold fell 1.8% to US$4,595.51/oz, silver fell 3.2% to US$73.13/oz, while the Bloomberg Dollar Index rose 0.2%. (Arl)*
Source: Newsmaker.id
