Gold Weakens, Here's Why!
Gold weakened after US President Donald Trump rejected Iran's latest peace offer to end the 10-week conflict that has disrupted energy routes in the Strait of Hormuz. The rejection rekindled inflation concerns as geopolitical tensions risk raising energy and logistics costs.
Bullion traded around US$4,678 per ounce, down 0.65% after rising around 2% last week. Pressure arose as the market reassessed the risk that inflation could persist for longer.
The situation in the Middle East is also considered fragile. A drone attack on Sunday reportedly set a cargo ship on fire off Qatar, while the United Arab Emirates and Kuwait claimed to have intercepted drones deemed hostile. These developments kept risk sentiment high, but also reinforced expectations of persistently high interest rates, which typically weigh on gold.
Market focus shifted to US consumer inflation data due Tuesday, after March inflation recorded its largest monthly increase since 2022. If inflation rebounds, expectations of tighter or longer-term monetary policy could pressure non-yielding assets like gold.
On the policy front, Fed Chairman Jerome Powell's term is expected to end this week, with the central bank's independence also a key market concern. The latest US labor data also showed payrolls rising again in April and unemployment remaining at 4.3%, giving the Fed room to hold interest rates while monitoring new inflation risks. In other markets, the US dollar edged up 0.1%, while silver fell 0.1%, and platinum and palladium also weakened. (asd)*
Source: Newsmaker.id
