Gold Heads for Weekly Weakness
Gold prices weakened on Friday (July 10th) and are poised for a weekly decline. Pressure stemmed from escalating military tensions between the United States and Iran, fueling concerns about rising inflation and the direction of the Federal Reserve's interest rates.
Spot gold prices fell 0.6% to US$4,101.11 per ounce, while gold futures weakened 0.8% to US$4,108.90 per ounce at 08:46 GMT. So far this week, spot gold has fallen around 1.8%, indicating that selling pressure continues to loom over the precious metals market.
Gold's decline occurred after the United States launched a series of attacks on Iran. US President Donald Trump declared the ceasefire with Iran over and ordered additional attacks, which then triggered a retaliatory response from Tehran. Despite reports that regional mediators are working to salvage a memorandum of understanding between the US and Iran, the prospects for peace in the Middle East remain uncertain.
The surge in oil prices due to these tensions has raised concerns that energy-based inflation could rise again. This situation has the potential to push the Fed to maintain a more hawkish stance. Higher interest rates are negative for gold because they increase the opportunity cost of holding non-yielding assets. In addition to gold, silver and platinum also weakened throughout the week, with silver falling more than 4% and platinum correcting around 0.3%.
Market Impact:
For gold, the main pressure still comes from expectations of high interest rates. As long as the market perceives the Fed as potentially remaining hawkish due to energy inflation, gold's room for strengthening could be limited despite geopolitical tensions.
For the US dollar, this sentiment tends to be positive. If inflation risks increase and the market re-prices interest rate hikes, the dollar could potentially remain strong, further depressing gold prices.
For oil, the US-Iran conflict remains a key catalyst. If the escalation continues, oil prices could rise again due to market concerns about energy supply disruptions from the Middle East.
For investors, gold is still not fully functioning as a primary safe haven in this situation. The market is more focused on the impact of the conflict on oil, inflation, and interest rates rather than simply seeking protection from geopolitical risks.
Source: Newsmaker.id
