Gold Under Pressure, Hormuz Raises Fed's Caution
Gold prices weakened on Monday (July 13th) after the United States and Iran launched renewed attacks 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 1.4% to near US$4,060 per troy ounce, nearly matching last week's decline in percentage terms. At 8:40 a.m. Singapore time, spot gold fell 1.2% to US$4,068.91 per troy ounce. Silver also weakened 1.8% to US$58.82 per ounce, while platinum and palladium also fell.
The market's primary focus remains on the Strait of Hormuz. Iran declared the waterway closed until further notice, but the United States denied the claim. CENTCOM stated that the Strait of Hormuz remains open to lawful passage and that US forces are ready to maintain freedom of navigation in the strategic waterway.
The US also launched its fourth attack in a week on an Iranian vessel after accusing Tehran of attacking containers for free. This escalation has re-escalated energy markets, as Hormuz is a vital route for global oil and gas supplies. If disruptions continue, oil prices could remain high.
For gold, the situation is complicated. Geopolitical tensions typically support safe-haven demand, but rising oil prices could amplify inflation risks. If inflation rises again, the Fed will likely keep interest rates high for longer or even open the door to a rate hike. This puts a burden on gold, as the precious metal does not offer an unbalanced return.
Investors are also now awaiting US consumer inflation data for June and Kevin Warsh's first appearance before Congress as Fed Chair. If inflation data is more volatile or Warsh signals a hawkish tone, pressure on gold could continue. However, if tensions in Hormuz ease and the dollar weakens, gold will continue to seek a foothold above US$4,100. (asd)
Source: Newsmaker.id*
