Gold Under Pressure as Markets Weigh Hormuz Risk and Fed Outlook
Gold prices weakened for a second consecutive day after fresh attacks on vessels in the Strait of Hormuz reminded markets of the risks facing ships carrying oil and natural gas through the key waterway.
Bullion fell as much as 0.9 percent to near US$4,125 per troy ounce, after losing 0.3 percent on Monday. The pressure came after a tanker was reportedly struck east of Oman. Separately, Axios reported that Iran fired at least two missiles at commercial ships transiting the Strait of Hormuz.
The incident pushed oil prices higher and renewed concerns over inflation. Higher energy prices can add fresh pressure to global costs, which may increase the likelihood of interest-rate hikes. This is generally negative for gold because the metal does not pay interest.
Despite the decline, gold is still trading within a relatively narrow range. Investors are now waiting for fresh clues on the Federal Reserve’s interest-rate outlook when the US central bank releases the minutes of its June meeting later this week.
Rate-hike expectations had previously increased after the hawkish stance taken by new Fed Chair Kevin Warsh. However, bets on higher rates eased again after weaker-than-expected US jobs data last week.
Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc., said the market is taking a slightly more cautious view on the prospect of US rate hikes. According to her, this has helped provide some support for hard assets such as gold.
Technically, gold remains above the psychological level of US$4,000 per troy ounce. The metal also recently posted its first weekly gain since May, after previously falling below that key level and several important moving averages.
Light bargain-hunting has helped gold climb back above its 10-day moving average. However, the metal is still facing resistance around US$4,180, while technical support is seen above US$4,130.
At 10:34 a.m. in Singapore, spot gold fell 0.6 percent to US$4,138.55 per troy ounce. Silver declined 0.9 percent to US$61.51 per ounce. Platinum was little changed, while palladium edged higher. The Bloomberg Dollar Spot Index, which tracks the US currency, was flat.
Source : Newsmaker.id
