Gold Under Pressure from Conflict!
Gold prices remain stuck in a weakening zone after the United States and Iran exchanged renewed attacks in the Persian Gulf. This situation has threatened the ceasefire that had been in place for about four weeks and sparked renewed concerns about inflation and the direction of US interest rates.
Gold is trading around US$4,520 per day after previously falling around 2% in Monday's trading. Pressure on gold arose because the escalating conflict pushed up oil prices, while US bond yields also rose amid concerns that energy inflation could further pressure the economy.
The US military stated that it successfully thwarted an Iranian attack while assisting the passage of two US-flagged ships through the Strait of Hormuz. Tensions also escalated after the United Arab Emirates said it had intercepted a missile fired by Iran and blamed an Iranian drone attack for causing a major fire at the port of Fujairah.
This situation has shaken the ceasefire that had been in place since April 8. The surge in oil prices has led market participants to increase speculation that the Fed could raise interest rates again to curb inflation. This has negatively impacted gold, as gold does not provide a return like bonds.
Capital.com analyst Kyle Rodda believes that Middle East tensions, rising oil prices, a strengthening dollar, and rising yields are a combination that is pressuring gold. If the conflict continues to escalate and push the dollar and US yields higher, gold prices are at risk of further weakening.
Looking ahead, market participants will be closely watching the US Treasury Department's three-month borrowing plan and a number of key economic data. This data will provide fresh clues on the direction of interest rates, while developments in the US-Iran conflict remain the main factor determining gold's movement in the short term.
5 Key Points
- Gold held around US$4,520 per ounce after falling about 2% in the previous trading session.
- The US-Iran conflict has escalated again in the Persian Gulf, threatening the ceasefire.
- Oil prices have surged, fueling concerns about energy inflation.
US bond yields have risen, putting pressure on gold as it provides no yield.
- The market's focus is briefly on the Fed, US economic data, and developments in the Middle East conflict. (asd)*
Source: Newsmaker.id
