Gold Strengthens, Oil Decline Eases Inflationary Pressure
Gold prices rose slightly in trading on Friday (July 24th) and remained on track for weekly gains. Spot gold rose 0.2% to US$4,059.20 per troy ounce, while futures rose 0.3% to US$4,061.30.
Gold's rise was supported by a decline in oil prices after a sharp spike due to the Middle East conflict. However, oil prices are still heading for a strong weekly gain as the risk of supply disruptions has not subsided.
Tensions remain high after the United States military completed attacks on Iranian targets for the 13th consecutive day. The attacks targeted military facilities, drone storage facilities, and coastal surveillance posts.
Iran has also reportedly rejected a US-backed ceasefire proposal. Meanwhile, threats of attacks on ships in the Strait of Hormuz and Bab el-Mandeb continue to raise concerns about the world's main oil shipping route.
The market is pricing in a 29% chance that the Federal Reserve will raise interest rates by 25 basis points at its meeting next week. Rising oil prices risk fueling inflation and reinforcing high interest rate policies, which could limit gold's appeal.
The continued strength of the US dollar is also putting pressure on the precious metal. However, as long as the Middle East conflict persists and oil prices begin to correct, gold still has the potential to maintain weekly gains of more than 1%. (arl)
Source: Newsmaker.id
