Gold Under Pressure, Inflation a Threat Again?
Gold prices weakened again on Tuesday (July 7th), after inflation concerns once again loomed over the market. Gold, or XAU/USD, fell for the second consecutive day, moving to the US$4,125–US$4,124 per troy ounce range during the Asian session.
Pressure on gold emerged after crude oil prices rose slightly due to renewed tensions in the Strait of Hormuz. The rise in oil prices sparked concerns that inflationary pressures could rise again. This pushed up US government bond yields and made non-yielding gold less attractive.
Tensions in the Strait of Hormuz remain a major market concern. Iran is said to be seeking to strengthen its strategic control over the waterway and plans to impose fees on ships passing through. Tehran claims the fees are related to security, ship surveillance, and environmental protection, although the move has been rejected by the United States.
The situation was further complicated after a maritime agency reported that an oil tanker was hit by an unknown projectile while transiting the Strait of Hormuz. This incident exacerbated uncertainty surrounding the interim peace agreement between the United States and Iran, while also supporting crude oil prices.
On the other hand, gold's decline was restrained by waning expectations for a Federal Reserve interest rate hike. A weaker-than-expected US jobs report led market participants to lower their projections for a Fed rate hike in 2026. This also put pressure on the US dollar and helped limit gold's decline.
Market participants are now awaiting the release of the FOMC meeting minutes on Wednesday for clearer clues regarding the direction of the Fed's policy. Technically, gold's movement remains fragile and risks further decline if selling pressure persists. However, as long as the US dollar does not strengthen significantly, gold's decline has the potential to remain limited. (asd)*
Source: Newsmaker
