Gold Strengthens Despite Hormuz Tensions, Market Focuses on Peace Outlook
Gold prices rose on Friday (May 8), breaking above $4,720 per ounce, reaching their highest level since April 22 and on track for a weekly gain of more than 2%. This gain occurred as the market assessed that optimism over a potential US-Iran peace deal could ease concerns that inflation would remain high and force interest rates to remain tight for longer.
Sentiment was also influenced by geopolitical developments, despite the latest exchange of fire between the US and Iran, which posed the most significant test yet of the nearly month-long ceasefire. Iran stated that the situation had stabilized, while US President Donald Trump asserted that the ceasefire was still "in effect," helping the market withstand a broader escalation in risk appetite.
On the data front, investors were watching the latest US employment report, which showed the economy added 115,000 jobs last month, beating the 62,000 forecast and indicating that labor market conditions remained relatively strong. The combination of easing geopolitical signals and jobs data that hasn't weakened sharply has led the market to assess that the interest rate path remains dependent on further confirmation of inflation and activity.
However, the context of gold's movement since the conflict broke out in late February suggests the market remains sensitive to the energy-inflation channel. Gold has reportedly fallen more than 10% since the war began, pressured by surging oil prices that have raised inflation concerns and clouded the interest rate outlook. Going forward, market participants will monitor the stability of the ceasefire, energy price dynamics, as well as the release of inflation data and central bank policy signals as key variables for gold's direction.
Source: Newsmaker.id
