Gold Under Pressure, Market Reassesses "Higher for Longer" Scenario
Gold prices (XAU/USD) weakened on Tuesday (May 26), dragged down by a strengthening dollar and a rebound in oil prices after a US military strike in southern Iran dampened optimism for a swift resolution to the Middle East conflict. At the time of writing, XAU/USD was hovering around US$4,523 per troy ounce.
The pressure came from a combination of two main channels: a stronger dollar and a rebound in oil. The dollar tends to pressure gold because it makes bullion more expensive for non-US buyers, while stronger oil keeps the risk of energy inflation relevant, leading the market to reconsider the "higher for longer" interest rate scenario, which is typically unfriendly to non-yielding assets like gold.
On the geopolitical front, US Central Command (CENTCOM) called the strike defensive, but the limited escalation still raised uncertainty around Hormuz. The impact on gold is asymmetrical: tensions can boost safe-haven demand, but if oil rises and the dollar strengthens at the same time, safe-haven support is often offset by inflation and interest rate channels.
The next areas of focus include developments in US-Iran negotiations and the security of the Hormuz shipping lanes, the direction of oil (whether the rebound continues), the movement of the dollar index, and US inflation data, which will shape expectations for Fed policy. (Arl)*
Source: Newsmaker.id
