Gold Rises, Energy Risk Premise Begins to Erode
Gold strengthened in Monday's (May 25) US trading session, helped by a weaker dollar amid hopes the US and Iran are moving closer to a deal to end a three-month war that has triggered energy supply shocks.
Spot gold (XAU/USD) was around US$4,564 per ounce. Meanwhile, July gold contracts were last reported up US$45.80 to US$4,602.20 per ounce.
Gold's gains came as talks between the two countries continued regarding the Strait of Hormuz, which has reportedly been closed for almost three months, hindering the flow of energy supplies from the Gulf region. The Wall Street Journal previously reported that Iran was willing to end its blockade of the strait in exchange for an end to the US blockade of Iranian ports, but noted that a final agreement was not yet reached.
On the foreign exchange side, the dollar weakened early in the session, with the ICE Dollar Index last reported down to 98.97. Market liquidity is also potentially thinner as the US stock market and bond markets are closed on Monday for the Memorial Day holiday.
In recent sessions, gold has tended to move in a range as the market balances two narratives: a weakening dollar, which supports the precious metal, versus the risk of energy-driven inflation, which could restrain interest rate easing and maintain the appeal of yield-bearing assets.
The next focus will be official confirmation and implementation details of the US-Iran deal, signals of a recovery in shipping flows in Hormuz, and the direction of the dollar when the US bond market returns to normal operations on Tuesday. (Arl)*
Source: Newsmaker.id
