Gold Holds Rally, Fed Still Looming
Gold prices maintained their gains on Tuesday (June 16th) after US President Donald Trump said the Strait of Hormuz could potentially be reopened on Friday. Spot gold rose 0.8% to US$4,346.46 per ounce at 10:14 a.m. London time, extending its 2.2% gain in the previous session. Silver also gained 0.9% to US$70.62, while platinum and palladium also moved positively.
Gold's rise was driven by hopes that an interim US-Iran deal could end the war and lift the maritime blockade in the region. If Hormuz were reopened, global energy flows could improve and pressure on oil prices could ease. WTI was trading near US$79 per barrel after falling nearly 5% on Monday, while Brent was hovering around US$81 per barrel.
For gold, the decline in oil was a key catalyst. Since the war began in late February, high energy prices have heightened inflation risks and encouraged central banks to maintain high interest rates for longer. These conditions put pressure on gold because the precious metal offers no yield. Therefore, when oil prices fell and inflation risks began to subside, pressure on gold also eased.
However, the market hasn't completely calmed down. US allies are said to remain less optimistic about how quickly energy and commodity flows through Hormuz can return to normal. Furthermore, the US-Iran deal still needs to be formalized, and the technical details of opening the shipping lane are not yet fully clear.
Precious metals market players are also awaiting central bank decisions this week, particularly the Federal Reserve under new Chairman Kevin Warsh. Market expectations still point to the possibility of an interest rate hike this year. If the Fed sounds hawkish, gold's upside could be limited; however, if yields and the dollar remain weak, gold has the opportunity to maintain its recovery momentum.
Fundamentally, gold's current direction is determined by three main factors: the implementation of the Hormuz reopening, the direction of oil prices, and the Fed's interest rate signals. As long as oil prices remain low and the dollar weakens, gold will still find support. However, if the US-Iran deal stalls or the Fed reiterates inflation risks, XAU/USD volatility could increase again. (Arl)
Source: Newsmaker.id
