Middle East Risks Pressure Gold Prices
Gold prices remained under pressure on Thursday (July 16th), as investors focused more on the inflationary risks from rising oil prices than on lower-than-expected US inflation data.
At 4:42 a.m. ET (8:42 a.m. GMT), XAU/USD fell 0.7% to US$4,032.37 per troy ounce. Gold futures also weakened 0.4% to US$4,037.10. Meanwhile, silver fell 1.48% to US$56.92, and platinum weakened 1.11% to US$1,659.20.
Earlier, the US Producer Price Index (PPI) fell 0.3% in June, lower than market expectations for no change. This data followed a similarly more subdued CPI report, reinforcing signs that inflationary pressures were easing.
However, the market remains unconvinced that the downward trend in inflation will persist. The renewed escalation of Middle East conflict has pushed oil prices up for the fourth consecutive day. This energy surge has raised concerns that inflation could rise again in the coming months.
The Fed is also maintaining a cautious stance. Fed Chairman Kevin Warsh emphasized that the central bank remains committed to bringing inflation back to its 2% target. Meanwhile, Lisa Cook opened the door to further action if inflation remains high, and John Williams believes the current interest rate stance is appropriate to suppress inflation.
As a result, gold is still struggling to strengthen because high oil prices could force the Fed to maintain high interest rates for longer. If the dollar and Treasury yields rise again, pressure on gold could continue. However, if subsequent inflation data remains benign and oil prices begin to subside, gold could potentially receive a boost. (arl)
Source: Newsmaker.id
