Gold Steady, Market Eyes Hormuz and Ahead of US CPI
Gold prices moved within a narrow range after posting two days of modest gains, as investors assessed the Middle East conflict stalemate and Asian stock market volatility ahead of the release of US inflation data. Spot gold traded around US$4,726 per ounce, briefly paring intraday gains.
Geopolitical sentiment remained the primary driver. US President Donald Trump on Monday criticized Iran's response to a US peace proposal and called the fragile ceasefire in the Strait of Hormuz on "massive life support," diminishing hopes for a quick resolution and maintaining uncertainty over strategic energy routes.
In the stock market, volatility briefly emerged, with South Korean shares falling more than 5% before paring losses. The decline was triggered by comments from a local policymaker about the idea of a "dividend" for citizens from an AI profits tax, which was later clarified. Such equity movements also influence demand for safe-haven assets, including gold, although the impact is not always one-way.
Fundamentally, gold faces a trade-off. This year, its movement has been volatile: it hit a record in late January and then corrected. Since the Middle East conflict broke out, high oil prices have fueled inflation concerns, leading to the view that central banks could maintain high interest rates or even raise them to cushion the impact of energy inflation. High interest rates are a drag on gold because it offers no yield.
Christopher Wong of Oversea-Chinese Banking Corp. believes gold's movement is now more of a "macro risk proxy" than a pure safe haven, as it is caught between the oil and inflation channels, Fed pricing, dollar dynamics, and risk sentiment. Ahead of the US CPI, spot gold fell 0.2% to US$4,726.09 at 12:37 p.m. in Singapore, while the Bloomberg Dollar Spot Index rose 0.2%. Silver rose 0.2% to US$86.25 after a surge of more than 7% on Monday; platinum and palladium fell.
5 key points:
- Gold held steady around US$4,726 ahead of the US CPI release.
- Trump called the Iran ceasefire "massive life support," keeping geopolitical risks at bay.
- Asian markets were volatile, including South Korean stocks, which fell sharply and then partially recovered.
- High oil prices kept inflation risks at bay and reinforced the narrative of persistently high interest rates, creating a headwind for gold.
- The dollar strengthened slightly; gold fell 0.2% in the Singapore afternoon session, while silver edged higher. (asd)*
Source: Newsmaker.id
