Hormuz Becomes a Hot Topic, Gold Struggles to Recover
Gold prices held steady around US$4,655 per ounce and headed for a moderate weekly decline, as the war-fueled surge in US inflation reinforced expectations of high interest rates. On a weekly basis, gold has fallen by about 1.3% since last Friday.
The main pressure came from resurgent US inflation data: wholesale inflation in April reportedly rose to its fastest pace since 2022, while consumer inflation recorded its largest increase since 2023. This condition drove a strengthening US dollar and a rise in the 10-year Treasury yield, a combination that is generally negative for gold, as it offers no yield and is priced in dollars.
On the geopolitical front, the Strait of Hormuz remains effectively closed as efforts to end the Iran war remain stagnant, prolonging the energy crisis and keeping inflation concerns high. Oil prices are also on track for a weekly rise, with WTI approaching US$102 per barrel on Friday.
Despite the heightened geopolitical risks, gold's movements are likely to be limited. The precious metal has traded within a relatively narrow range since its sharp fall at the start of the war, as investors weighed two competing narratives: inflation that could keep interest rates high versus growth concerns that could potentially prompt policy easing if the conflict drags on. Gold has fallen more than 11% since the war began.
In terms of positioning, TD Securities believes hedge funds have the potential to increase their exposure to gold in the coming days. Senior commodity strategist Ryan McKay stated that the price scenario still supports position accumulation by commodity trading advisors (CTAs) in various price path simulations. Meanwhile, silver rose around 13% throughout May, supported by speculative interest in industrial metals, and the recent decline in the gold-silver ratio is seen by some market participants as a signal that silver is relatively "cheaper."
In Asia, India reportedly tightened gold import regulations again as part of an effort to defend the rupee, just days after raising import duties, a move that could weigh on demand sentiment in the world's second-largest bullion market. At 7:46 a.m. Singapore time, spot gold rose 0.1% to US$4,656.92, silver rose 0.1% to US$83.63, while platinum and palladium weakened. The Bloomberg Dollar Spot Index remained relatively stable, rising 0.8% over the week. (asd)*
Source: Newsmaker.id
