Gold Moves Limited in Asian Session
Newsmaker.id - Gold prices moved limitedly in Asian trading on Friday (July 10th), after recording a gain of more than 1% in the previous session. XAU/USD traded around US$4,120 per troy ounce, weakening slightly as investors began to take profits following Thursday's price surge.
In the previous trading session, spot gold jumped 1.3% to US$4,130.58 per troy ounce. This gain was driven by buying at low prices and increased demand for safe-haven assets following the renewed escalation of tensions between the United States and Iran.
Although geopolitical risks remain supportive, gold's upside is limited due to expectations of a tighter Federal Reserve monetary policy. The market estimates the chance of a Fed rate hike in September at around 62%, amid concerns that the Middle East conflict could again push up energy prices and inflation.
Pressure also comes from the outlook for the US dollar and persistently high bond yields. A high interest rate environment tends to reduce the appeal of gold because the precious metal offers no yield, so investors are more interested in investing in interest-bearing assets such as US government bonds.
Looking ahead, gold's movement is expected to remain volatile, with market attention focused on US inflation data and Fed Chairman Kevin Warsh's testimony to Congress next week. As long as the price remains above US$4,100, there is still a chance for a rebound, but gains are likely to be contained around US$4,130 to US$4,150.
Market Impact:
Gold: Tends to consolidate. Geopolitical risks are a support, but expectations of a Fed rate hike are limiting gains.
US Dollar: Potential to strengthen if US inflation data returns to high levels, increasing the likelihood of an interest rate hike.
Treasury yields: Potential to remain high as the market still anticipates a hawkish Fed policy.
Oil: Falling oil prices could ease inflationary pressures and limit demand for gold as a hedge.
Conclusion: Gold continues to draw support from the US-Iran conflict, but the Asian session's movement appears more like consolidation after a sharp rally, rather than the start of a new uptrend. The US$4,100 area serves as key support, while US$4,150 is the closest resistance.(CP)
