Gold Rebounds, Fed and Conflict Loom
Gold prices regained support on Thursday (July 9th) after weakening for three consecutive days. The precious metal strengthened as traders reconsidered the escalation of conflict in the Middle East and the direction of the Federal Reserve's interest rate policy.
Spot gold briefly rose as much as 1.5% and hovered around US$4,100 per troy ounce. At 3:44 p.m. New York time, gold was trading up 1.1% to US$4,120.49 per troy ounce.
This increase occurred after the latest attack on Iran re-escalated the regional situation. US Central Command said the attack was aimed at weakening Iran's ability to disrupt commercial shipping in the Strait of Hormuz.
The attack occurred just hours after US President Donald Trump declared that the ceasefire with Iran was "over." Iran then retaliated by targeting US bases in Bahrain, Kuwait, and Qatar.
For the gold market, Middle East conflicts complicate sentiment. On the one hand, geopolitical tensions typically drive demand for safe havens. However, on the other hand, the risk of energy disruptions could trigger higher oil prices and increase inflationary pressures.
If energy inflation rises again, the Fed could potentially keep interest rates high for longer. In fact, the market could re-price the possibility of a rate hike. This puts pressure on gold because the asset offers no yield.
Saxo Bank analyst Ole Hansen believes gold is starting to find support above the US$4,050 per troy ounce area. The weakening US dollar and Treasury yields have helped gold prices rebound from previous pressure.
According to Hansen, gold's movement in the past 24 hours reinforces the view that the market is shifting from a capitulation phase to a consolidation phase. This means that significant selling pressure is easing, but gold is not necessarily immediately entering a strong uptrend.
More broadly, gold is still down more than a fifth since the Iran war began in late February. Previous heavy profit-taking ended a three-year rally and pushed gold prices below US$4,000 several times.
This pressure has also led several banks to cut their gold price projections. HSBC cut its average 2026 gold price estimate by 6.3% to US$4,560 per troy ounce, following similar moves by UBS, Deutsche Bank, and Goldman Sachs.
In other precious metals markets, silver also strengthened 2.8% to US$59.91 per troy ounce. Platinum and palladium also moved higher, while the Bloomberg Dollar Index remained relatively unchanged.
For the market, the current gold rebound signals that selling pressure is beginning to subside. However, the rally remains unsafe as long as the Middle East conflict risks fueling energy inflation and keeping the Fed hawkish. (arl)
Source: Newsmaker.id
