Gold Holds, $4,650 Support Breaks, Pressures Sentiment
Gold prices held steady after two consecutive sessions of decline, as market participants remained focused on developments in US-Iran talks amid the prolonged closure of the Strait of Hormuz and the continued high risk of inflation. Bullion hovered around $4,590 per ounce in recent trading.
Gold previously fell 2.4% in two sessions and hit a nearly four-week low. US President Donald Trump said Iran had asked the US to lift its naval blockade of Hormuz while the two sides negotiated an end to the two-month war that has disrupted global energy supplies.
Mediators in Pakistan are said to expect Tehran to submit a revised proposal in the coming days, according to a CNN report. The market views any signs of a change in the status of the energy route as a key factor, as it could impact oil prices and the direction of inflation.
Investors are also awaiting a series of interest rate decisions in the US, the European Union, the UK, and Canada in the coming days. In Japan, the Bank of Japan maintained its benchmark interest rate at 0.75% in a split vote, raising market concerns about the possibility of a June hike.
From a fundamental perspective, energy supply shocks heighten inflation risks and increase the likelihood of central banks holding interest rates longer or even raising them, which is a drag on gold because it offers no yield. Rising yields also increase the opportunity cost of holding gold, while gold is said to have fallen by around 13% since the conflict began in late February when oil prices surged.
Technically, selling pressure emerged after gold broke through support around $4,650, according to Ole Hansen of Saxo Bank. He believes the market's near-term focus remains on mediation efforts, with the reopening of the strait and the oil decline seen as the main positive catalysts for the precious metal. In recent trading, spot gold fell 0.1% to $4,594.14 (11:48 Singapore time), silver rose 0.8% to $73.66, while the Bloomberg Dollar Index held steady. (asd)
Source: Newsmaker.id
