Gold Attempts to Rebound Near US$4,200
Gold prices strengthened around US$4,200 per troy ounce in the first half of the European trading session on Monday (June 22nd). This strengthening enabled gold to recover from pressure after weakening for three consecutive days and hitting its lowest level in more than a week in previous trading.
Support for gold came from weakening crude oil prices after mediators from Qatar and Pakistan announced an official 60-day roadmap to push for a final peace agreement between the United States and Iran. The decline in oil prices helped ease market concerns about inflationary pressures and the potential for more aggressive interest rate hikes.
However, gold's upside remains limited. Market participants still estimate a nearly 90 percent chance that the Federal Reserve will raise borrowing costs by the end of this year. These expectations were strengthened by the Fed's hawkish projections last week, which signaled that interest rates could still be raised if inflation remains difficult to reduce.
Furthermore, the new Fed Chairman, Kevin Warsh, emphasized the importance of price stability in his press conference after the policy meeting. The statement suggests that the US central bank will not rush to cut interest rates, even though economic growth is showing signs of slowing. This situation maintains support for the US dollar and has the potential to restrain gold's gains.
From a geopolitical perspective, tensions remain a key factor for the market to monitor. Iran accused the US and Israel of violating the ceasefire and then re-announced the closure of the Strait of Hormuz due to Israel's ongoing attacks on Lebanon. Meanwhile, US President Donald Trump threatened to take new military action against Iran if Hezbollah continues its attacks on Israel. This situation indicates that the diplomatic process remains fragile and the geopolitical risk premium remains strong.
Going forward, market attention will remain focused on developments in US-Iran talks, as any new news could trigger volatility in global markets. Furthermore, comments from key FOMC officials will also influence the direction of the US dollar and gold prices. With the combination of geopolitical risks, high interest rate expectations, and a still-strong dollar, gold's recovery is potentially limited and remains vulnerable to renewed selling pressure. (asd)*
Source: Newsmaker.id
