Gold Falls Slightly, Holds at US$4,500 as Markets Monitor Ceasefire
Gold fell slightly on Tuesday (May 19), paring some of the previous session's gains, as markets monitored the latest developments regarding the US-Iran ceasefire. Prices fluctuated before easing and holding just above the US$4,500 per troy ounce area.
Spot gold fell 0.5% to US$4,544 per ounce at 9:13 a.m. London time. Other precious metals also fell, with silver falling 2.2% to US$76.05, while platinum and palladium also weakened.
The main pressure came from US Treasury yields remaining near multi-year highs, while persistently high energy prices continued to maintain inflation concerns. The combination of high yields and higher borrowing costs typically reduces the appeal of non-yielding gold, while the dollar index rose 0.2%, making gold more expensive for buyers outside the US.
On the geopolitical front, US President Donald Trump said on Monday that he had authorized a new wave of attacks on Iran this week, but held off on the move after the leaders of Qatar, Saudi Arabia, and the United Arab Emirates requested more time to allow for diplomatic progress. These rapidly changing dynamics have caused the market to continually reassess the risk premium attached to hedge assets.
Since the early stages of the war, gold has been seen moving within a relatively narrow range after initially falling sharply when inflation concerns began to be tempered by the prospect of monetary easing due to the risk of slowing growth. Bullion has fallen nearly 14% since the conflict began. According to Vasu Menon of Oversea-Chinese Banking Corp., uncertainty surrounding the Middle East, along with the direction of oil prices and bond yields, still has the potential to weigh on gold in the short term, although gold remains viewed as a hedge against broader global uncertainty. (asd)*
Source: Newsmaker.id
