Gold Holds Gains, Hormuz Key to Market
Gold prices held firm around US$4,309/oz after US President Donald Trump said the Strait of Hormuz could potentially reopen on Friday. Previously, gold rose 2.2% after the US and Iran announced a temporary agreement to end their war and lift a maritime blockade in the region.
Gold's rise occurred because the market believes the opening of Hormuz could ease global energy and inflation pressures. Oil remained stuck in lower territory, with WTI near US$81/barrel after dropping nearly 5% on Monday, while Brent ended around US$83/barrel. If oil prices continue to fall, inflationary pressures could also ease.
For gold, this represents a significant shift. During the war that began in late February, gold was under pressure because high oil prices fueled inflation and encouraged central banks to maintain high interest rates for longer. Because gold does not provide a yield, high interest rates typically weigh on bullion.
However, the market remains cautious. US allies are said to be uncertain about the rapid recovery of energy and commodity flows through Hormuz. Furthermore, the US-Iran deal still needs to be formalized, so gold's short-term movement could remain volatile.
This week's main focus is also on central bank decisions, particularly the Federal Reserve under new Chairman Kevin Warsh. Spot gold edged up 0.1% to US$4,316.51/oz in Asian morning trade, while silver dipped slightly to US$69.87 after a strong rally in the previous session. The next direction will be heavily influenced by oil prices, the US dollar, yields, and the Fed's signal on interest rates.
5 key points:
- Gold held around US$4,315/oz after a strong rally in the previous session.
- Trump said the Strait of Hormuz could be fully reopened on Friday.
- Falling oil eased inflation concerns and supported gold.
- The market remains cautious as the recovery in energy flows is uncertain.
- The next focus is on the Fed, US yields, the dollar, and the implementation of the US-Iran deal. (asd)
Source: Newsmaker.id
