Gold Strengthens, Hopes for Peace, Buying Support
Gold prices rose more than 1% in trading on Tuesday (July 21st), supported by hopes of a diplomatic breakthrough between the United States and Iran. If the conflict subsides, energy price pressures could also ease and alleviate market concerns about the Fed's hawkish stance.
Spot gold rose 1.7% to US$4,071.32 per troy ounce. Meanwhile, US gold futures for August delivery rose 1.5% to settle at US$4,076.40 per troy ounce.
Positive sentiment emerged after a senior Iranian official stated that Tehran had accepted a proposal from mediators regarding a 10-day ceasefire. The proposal aims to salvage the interim agreement between the US and Iran.
Gold also received technical support after breaking out of a short-term downtrend that had formed since July 6th. However, analysts believe gold's movement could remain within a limited range in the near term.
Previously, rising oil prices due to supply disruptions in the Gulf region had weighed on gold. High energy prices can trigger inflation and reinforce expectations of prolonged high interest rates, which typically puts pressure on gold because it offers no yield.
Analysts believe this rally was driven more by buying after a decline, rather than entirely by new geopolitical news. Silver even performed stronger due to dual support: safe-haven demand and positive sentiment from industrial metals like copper.
As for the market, the US$4,000 area remains a key psychological level for gold. As long as it remains above this level, the opportunity for a rebound remains open. However, further gains could be hindered if the market re-prices the Fed's interest rate hike, with the probability of a September hike now hovering around 64%.
Source: Newsmaker.id
