Gold Rebounds, CPI a Major Test
Gold prices began to recover in European trading on Tuesday (July 14th) after hitting a two-week low. This increase occurred as some investors began bargain hunting after gold's sharp decline in the previous session.
At 5:58 a.m. ET (09:58 GMT), XAU/USD rose 0.5% to US$4,021.87 per troy ounce. Gold futures also rose 0.55% to US$4,027.22. Silver rose 0.78% to US$58.10, while platinum added 0.34% to US$1,609.82.
Gold's recovery comes after a nearly 3% drop on Monday, its deepest daily decline in more than a month. Gold even fell below the psychological level of US$4,000 for the first time in three weeks.
Previous pressure stemmed from escalating Middle East conflicts. US President Donald Trump announced he would reimpose a blockade on Iranian shipping in the Gulf region and called Washington the "Guardian of the Strait of Hormuz." He also proposed a 20% fee on cargo passing through the strategic waterway.
Rising oil prices due to the risk of supply disruptions in the Strait of Hormuz have rekindled inflation concerns. For gold, the situation is two-pronged. High inflation could make gold attractive as a hedge, but if inflation prompts the Fed to raise interest rates, the dollar and bond yields could strengthen, putting further pressure on gold.
Market focus is now on US consumer inflation data for June and Fed Chairman Kevin Warsh's testimony before Congress. Hawkish comments from Fed Governor Christopher Waller have previously raised the odds of a July interest rate hike to around 43%. If the CPI is hotter than expected or Warsh sounds hawkish, gold could be under pressure again, even though it is currently struggling to hold above US$4,000. (arl)
Source: Newsmaker.id
