Gold Held in the Shadow of Oil
Gold prices remained under pressure on Wednesday (July 15th) despite a weakening US dollar after lower-than-expected US inflation data came out. XAU/USD remained above the psychological level of US$4,000, but was unable to build strong gains as the market remained preoccupied with inflationary risks from energy prices.
US CPI data actually provided positive momentum for gold. Headline inflation fell 0.4% in June, while core CPI remained unchanged on a monthly basis. Annually, headline inflation slowed to 3.5% and core CPI fell to 2.6%. These figures initially boosted market expectations for a Fed rate hike and pushed the dollar to a nearly four-week low.
However, this positive effect quickly faded after Fed Chairman Kevin Warsh emphasized that the central bank would not tolerate persistently high inflation. This statement left the market open to the possibility that the Fed could raise interest rates in September or December, especially if oil prices again drive inflation.
The biggest pressure on gold comes from the escalating US-Iran conflict. The US airstrikes against Iran were retaliated with attacks on American military assets in the Gulf region. At the same time, Trump was told that the US could attack Iranian bridges and power plants if Tehran did not return to the negotiating table. This situation kept oil prices high and maintained concerns about energy inflation.
As a result, gold remains in a difficult position. The weakening dollar provided some support, but the possibility of a Fed rate hike and the risk of high oil prices remain significant burdens on bullion. The market's next focus will be on US PPI data, Kevin Warsh's continued testimony, and developments in the Middle East conflict, which could determine gold's short-term direction. (asd)*
Source: Newsmaker.id
