Gold Weakens Amid Hormuz Issue
Gold prices weakened in early trading on Monday (May 4) in European trade, extending pressure after recording a second consecutive weekly decline. Market focus was on developments toward a potential US-Iran deal, as well as US President Donald Trump's plan to begin "escorting" some ships through the Strait of Hormuz.
Bullion briefly fell as much as 0.9% to hover around US$4,575 per ounce, before spot gold fell 0.8% to US$4,577.33 per ounce at 9:09 a.m. London time. Trump stated that the US would begin directing ships not involved in the Iran conflict out of Hormuz starting Monday, while oil prices remained stable as market participants questioned the plan's effectiveness.
On the geopolitical front, Trump also signaled that Iran's latest peace proposal may not be enough to meet his expectations. The conflict, which has kept energy prices high, has also dampened hopes for central bank interest rate cuts, a combination that generally puts pressure on non-yielding assets like gold, with gold prices said to have fallen about 12% since the war began in late February.
Additional pressure comes from a strengthening dollar and concerns about energy-driven inflation, which have fueled a more hawkish tone from major central banks, according to commodity analysts at Motilal Oswal Financial Services. In this context, gold's movements become more sensitive to changes in interest rate expectations and the direction of the dollar, especially as the market reassesses the path of monetary policy.
Looking ahead, market attention is focused on the announcement of the US Treasury's three-month financing plan, a series of Fed officials' speeches, and a busy economic data calendar culminating in the monthly jobs release. In other metals markets, silver fell 1.4%, while platinum and palladium also weakened, while the Bloomberg Dollar Index remained relatively flat. (asd)*
Source: Newsmaker.id
