Beware, Gold Trapped by Hormuz and the Fed!
Gold prices remain stuck in a weakening zone after two major pressures resurfaced: tensions in the Strait of Hormuz and rising expectations of a Fed interest rate hike. Gold briefly fell below the psychological level of US$4,000 per troy ounce after plunging nearly 3% in trading on Monday, its biggest drop in more than two weeks.
The main pressure came from the United States' decision to reimpose a naval blockade on Iranian ports. President Donald Trump also demanded a 20% reimbursement of cargo passing through the Strait of Hormuz, amidst the US attacks on Iran that have lasted for three consecutive nights.
This situation has caused oil prices to rise again due to market concerns about disruptions to supplies from the Persian Gulf region. For gold, rising oil prices are not only a geopolitical issue, but also an inflationary one. If energy prices remain high, inflationary pressures could rise again, making it difficult for the Fed to ease policy.
Market concerns grew after Fed Governor Christopher Waller said that the central bank may need to raise interest rates in the near future. This statement has led swap market players to estimate the probability of an interest rate hike at the July meeting has increased to around 43%. Higher interest rates typically weigh on gold because it offers no yield.
Investors are now awaiting two important events from the United States: June consumer inflation data and Kevin Warsh's first testimony before Congress as Fed Chair. If the CPI data is hotter than expected or Warsh signals a hawkish tone, gold risks coming under renewed pressure.
In Asian trading, spot gold fell 0.6% to US$3,983.63 per troy ounce. Silver weakened 0.3% to US$57.50 per ounce, platinum also fell slightly, while palladium strengthened. For the time being, gold remains vulnerable as long as oil prices rise, the dollar remains strong, and the market is increasingly confident that the Fed could raise interest rates again. (asd)*
Source: Newsmaker.id
