Gold Held Back as US Attack on Iran Triggers Inflation Risk
Gold prices remained subdued on Thursday (July 9th) after declining for three consecutive days. Spot gold hovered around US$4,080 per troy ounce, as the market monitored the new escalation in the conflict between the United States and Iran, which has pushed energy prices higher.
Pressure on gold emerged after the US launched attacks on Iran for the second consecutive day. US Central Command (CENTCOM) stated that the attacks were aimed at weakening Iran's ability to disrupt shipping lanes in the Strait of Hormuz. This attack came after US President Donald Trump declared the ceasefire with Iran "over."
Rising oil prices are a major market concern. Washington also revoked permits that previously allowed Iran to sell oil globally. This situation has fueled concerns that energy inflation could rise again and has forced the Federal Reserve to maintain high interest rates for longer.
The minutes of the Fed's June meeting, released Wednesday, also showed that some officials briefly saw reasons to raise interest rates, although ultimately supported the decision to hold rates. Overall, Fed officials remain concerned about inflation, while concerns about the labor market have eased somewhat.
For gold, high interest rates pose pressure because the precious metal offers no yield. While geopolitical conflicts typically support demand for safe-haven assets, the market currently still views the impact of inflation and the Fed's policies as the more dominant factors.
At the time of writing, spot gold fell slightly by 0.45% to US$4,058.48 per troy ounce. Meanwhile, silver rose 0.2% to US$58.39 per ounce, platinum and palladium gained slightly, while the US dollar index remained relatively stable. (asd)*
Source: Newsmaker.id
