Gold Held Back, Stock Rally and Ahead of CPI Weaken Suggest Safe Haven
Gold prices held steady despite lingering Middle East tensions, as stock markets rallied and investors renewed their positions. Bullion traded around US$4,730 per ounce, indicating the market hasn't aggressively increased its risk premium, even though the conflict around the Strait of Hormuz still has the potential to disrupt sentiment.
US President Donald Trump's remarks also kept market participants' attention. Trump called Iran's response to last week's US peace proposal "a piece of garbage" and said the fragile ceasefire in the Strait of Hormuz was on "massive life support," reinforcing the signal that the conflict is not nearing a quick resolution.
However, equity markets remained higher as market participants tempered AI-themed optimism, limiting the rush to safe haven assets like gold. However, buying interest in gold remained strong as rising energy prices heightened inflation risks, and gold's role as a defensive asset was reassessed as governments stepped up.
MKS PAMP analyst Nicky Shiels believes the correlation between oil and gold is weakening as the market's response to the conflict changes and becomes "fatigued." He also believes that the stock rally has prevented gold from maximizing its momentum, so the precious metal tends to move like a combination of "loose risk assets" and "loose safe havens" in the current dynamics.
The market is now awaiting the release of US inflation (CPI) on Tuesday, with economists reporting a sharp increase after noting that the Iran war-related price impacts have spread to the manufacturing and agricultural sectors. Ahead of the data, spot gold fell 0.1% to US$4,728.29 per ounce at 9:46 a.m. in Singapore, while the Bloomberg Dollar Index rose 0.2%. Silver edged down to US$85.94 after surging more than 7% on Monday; platinum and palladium also weakened. (asd)
Source: Newsmaker.id
