Gold Holds Above US$4,100, Rate Hike Expectations Limit Gains
Gold prices moved flat above US$4,100 per troy ounce in trading on Thursday (July 23rd), ahead of the European session. XAU/USD remained consolidating and remained near its more than two-week high reached in the previous session.
Pressure on gold came from rising expectations of a Federal Reserve interest rate hike. The escalating conflict between the United States and Iran pushed oil prices to their highest level since June 11th, rekindling inflation concerns and keeping US Treasury yields high.
Geopolitical tensions also escalated after the US and Iran launched attacks on each other for the 12th consecutive night. Meanwhile, the Iran-aligned Houthi group in Yemen opened a new front by announcing a blockade of the key Red Sea shipping lane, which carries approximately 7% of the world's oil supply.
This situation has added to concerns about energy supply disruptions, especially after shipping traffic through the Strait of Hormuz also dropped significantly. Markets are concerned that rising energy prices could reignite inflationary pressures and force central banks to adopt a more hawkish stance.
According to the CME FedWatch Tool, market participants now estimate a greater than 90% chance that the Fed will raise interest rates before the end of this year. This expectation has helped keep US Treasury yields high, with the 10-year bond yield holding near a two-month high. However, a weakening US dollar still provides some support for gold and helps limit downward pressure.
In terms of market impact, gold remains in a consolidation phase as the market weighs two major sentiments. Expectations of a rate hike and high yields are limiting XAU/USD's upside, but a weakening US dollar and geopolitical risks remain supportive. The focus next turns to the US weekly jobless claims data, the European Central Bank's decision, and developments in the Middle East conflict, which could trigger short-term volatility. (asd)
Source: Newsmaker.id
