Gold Weakens, Market Monitors Slow US-Iran Deal
Gold prices weakened on Monday (June 1), pressured as investors entered a new week without certainty about a peace agreement between the United States and Iran.
Spot gold fell around 1% to US$4,494.91 per ounce at 9:34 a.m. London time, after previously dropping as much as 1.1% and moving below the psychological level of US$4,500 per ounce.
This weakening occurred after market optimism had risen last Friday, when the US and Iran were seen moving closer to a deal that could reopen trade routes in the Strait of Hormuz. However, those hopes faded again after both sides renewed tensions surrounding the strategic waterway and proposed changes to the draft agreement.
This situation also pushed oil prices up from a six-week low, as the market reconsidered the risk of energy supply disruptions. Rising energy prices have the potential to keep inflation high, forcing central banks, including the Federal Reserve, to maintain high interest rates for longer. This situation puts pressure on gold because the asset does not provide an interest yield.
Vantage Markets analyst Hebe Chen believes that gold is currently caught in a tug-of-war between safe-haven demand due to war uncertainty and pressure from real yields, which are sensitive to Fed policy. As long as the direction of the conflict and inflation remains unclear, gold has the potential to remain within a limited range. However, if inflation continues to support the dollar and real yields, gold risks losing ground and opening up the opportunity for further weakness.
Main Causes
Gold weakened due to the lack of certainty about US-Iran peace, rising oil prices, and the market's assessment of the risk of inflation remaining high. Additional pressure comes from expectations of prolonged high interest rates, making the dollar and real yields remain formidable opponents for gold.
Things to Watch
The US$4,500 area is an important psychological level for gold. If prices remain below this area, selling pressure could continue. However, if the conflict escalates and safe-haven demand increases, gold still has the opportunity to rebound. The market's next focus will be developments in the Strait of Hormuz, the Fed's statement, dollar movements, and the direction of oil prices.
Sumber: Newsmaker.id
