Gold Corrects, Market Awaits Fed Minutes
Gold prices weakened slightly in trading on Monday (July 6) after strengthening earlier in the session. The market is still weighing the direction of the Federal Reserve's monetary policy, while inflationary pressures are beginning to ease as oil prices continue to fall.
At 4:45 PM ET (8:45 PM GMT), spot gold fell 0.3% to US$4,163.56 per troy ounce. Meanwhile, gold futures rose 1.2% to US$4,175.20 per troy ounce.
Gold previously received a boost from weaker-than-expected US Nonfarm Payrolls data for June. This data led the market to believe that US employment conditions were still quite strong, but not overheated. This gave the Fed room to delay raising interest rates.
However, gold's gains were still restrained by uncertainty over the direction of the Fed's policy. Fed Chairman Kevin Warsh previously confirmed that the central bank would reduce its forward guidance and focus more on inflation data. Investors are now awaiting the minutes of the Fed's June meeting, which will be released Wednesday, to determine whether central bank officials are still open to an interest rate hike this year.
Meanwhile, inflationary pressures have begun to ease after oil prices fell to near pre-US-Israel conflict levels with Iran in late February. Oil prices weakened after OPEC+ agreed to raise its production target by 188,000 barrels per day starting in August. Furthermore, shipping traffic through the Strait of Hormuz remains quite strong, with Kpler data recording 108 vessels passing through the waterway from Friday to Sunday.
Although energy inflation has begun to ease, geopolitical risks have not completely disappeared. President Donald Trump reiterated that the US will seek a deal with Iran, but remains open to the possibility of "finishing the job" if diplomacy fails. For gold, this situation remains prone to volatility, as the market juggles pressures from interest rates, the US dollar, and Middle East geopolitical risks. (arl)
Source: Newsmaker.id
