Gold Under Pressure, Fed Looms
Gold prices are headed for their biggest weekly decline since early June as escalating conflict in the Middle East rekindles inflation concerns. This has led the market to believe the Fed still has the potential to raise interest rates to keep price pressures under control.
On Friday, gold rose slightly to around US$3,980 per troy ounce. However, on a weekly basis, prices are still down around 3.4%. The main pressure came after the United States launched another attack on Iran, including after an earlier attack hit an oil tanker near Iran's main export terminal.
The strengthening US dollar and rising bond yields also weighed on gold. Because gold is priced in dollars and does not provide a yield, the rise in the dollar and yields makes the precious metal less attractive to investors.
Meanwhile, oil prices maintained their large weekly gains due to the risk of supply disruptions in the Strait of Hormuz. The months-long conflict has again raised energy prices and increased the risk of global inflation.
Several Fed officials have begun to express concern about persistently high inflation. If energy prices continue to rise, the market fears the US central bank will have to open the door to another interest rate hike. This has created negative sentiment for gold.
As a result, gold still needs a strong push to stabilize above US$4,000. If oil prices begin to subside and the Fed's hawkish tone weakens, gold could have room to rebound. However, as long as the dollar, yields, and the risk of energy inflation remain high, XAU/USD remains vulnerable to pressure. (asd)*
Source: Newsmaker.id
