Gold Weakens, Iran and US CPI Under Pressure
Gold prices weakened on Monday (July 13th) after the United States and Iran launched renewed attacks on each other over the weekend. These renewed tensions pushed energy prices higher and rekindled concerns that inflation could rise, bringing the possibility of a Fed interest rate hike back into the market's attention.
Gold briefly fell as much as 1.2% to below US$4,070 per troy ounce, after weakening 1.4% over the past week. At 7:40 a.m. Singapore time, spot gold fell 1% to US$4,077.77 per troy ounce. Silver also fell 1.7% to US$58.83 per ounce, while platinum and palladium also weakened.
Market focus was on the status of the Strait of Hormuz, a vital waterway for global energy trade. Iran had declared the waterway would be closed until further notice, but the United States denied this statement. The US military stated that the attacks were carried out to ensure freedom of navigation in the region.
For the gold market, this escalation of the conflict did not immediately translate into positive sentiment. The reason is that rising oil prices could amplify inflationary pressures and force the Federal Reserve to maintain high interest rates for longer. The minutes of the Fed's June meeting, released last week, also showed that some officials briefly considered raising interest rates, although they ultimately agreed to hold policy.
In addition to the Middle East conflict, investors are also awaiting June US consumer inflation data and Kevin Warsh's first appearance before Congress as Fed Chair. These two events are considered important because they could provide new direction for July interest rate expectations. If inflation data is higher than expected or Warsh sounds hawkish, pressure on gold could potentially continue. (asd)*
Source: Newsmaker.id
