Safe Haven Stifled, Gold Falls Amid Energy Inflation
Gold prices weakened in recent trading and are headed for a weekly decline of around 2%. Spot gold fell slightly to around US$4,614.98 per troy ounce, while US gold futures also weakened to around US$4,626.40. This pressure arose as market participants continued to monitor the surge in oil prices and its impact on the global inflation outlook.
The main factor weighing on gold is concern that persistently high oil prices could prolong inflation. This has led the market to believe that central banks, including the Federal Reserve, could potentially maintain high interest rates for longer. For gold, this situation poses a burden because it offers no yield, making it less attractive when interest rates and yields remain high.
On the other hand, geopolitical tensions continue to restrain gold from declining further. The conflict over Iran and uncertainty in the Strait of Hormuz continue to make some investors cautious. However, for now, inflation sentiment and expectations of high interest rates outweigh demand for safe havens.
Going forward, gold's direction will depend on three main factors: oil prices, the strength of the US dollar, and the Fed's policy signals. If oil remains high and inflation rises again, the opportunity for an interest rate cut could be further delayed, and gold risks coming under further pressure. However, if the dollar weakens or geopolitical risks increase, gold still has the potential to rebound. (CP)
Source: Newsmaker.id
