Hormuz Tensions Ease; Gold Holds at US$4,070
Gold prices traded steadily within a narrow range during Asian trading on Wednesday (August 5). Spot gold dipped slightly by about 0.2% to US$4,069.41 per troy ounce, following a 0.6% gain in the previous session. A relatively flat US dollar meant gold lacked strong momentum for significant movement.
Market sentiment was bolstered by progress in talks regarding the reopening of the Strait of Hormuz. Qatar indicated that a draft proposal has been prepared, while US and Iranian officials signaled that negotiations are moving forward. This optimism caused oil prices to drop sharply; Brent previously closed at US$79.36 and WTI at US$75.77 per barrel.
The decline in oil prices eased concerns regarding energy-driven inflation and dampened expectations for aggressive tightening by the Federal Reserve. Markets now anticipate only one interest rate hike through the end of the year, down from the two hikes projected last week. Reduced odds of a rate hike serve as a positive factor for gold, a non-yielding asset.
However, progress in US-Iran diplomacy also reduced demand for gold as a safe-haven asset. Consequently, gold's movement was constrained, as support from lowered interest rate expectations was offset by diminishing geopolitical risk. The Fed had previously held interest rates steady for the fifth consecutive time, although three officials had voted for a 25-basis-point hike.
Additional support came from Chinese investors. Gold-backed ETFs in the country recorded inflows for 14 consecutive days through Monday, marking the longest such streak since March. Buying during price dips helped gold hold above the psychological US$4,000 level.
Market focus today is on the ADP Non-Farm Employment Change data for July, scheduled for release at 19:15 WIB. The consensus forecast stands at approximately 68,000–70,000, lower than the previous figure of 98,000. Weaker data could weigh on the dollar and support gold, whereas stronger results might revive expectations of an interest rate hike.
Newsmaker Analysis: Gold is likely to remain in a consolidation phase while trading between US$4,050 and US$4,100. A break above US$4,100 would open the door for a rise toward the US$4,135–US$4,150 range. Conversely, a drop below US$4,050 could see gold test levels between US$4,020 and US$4,000. The next direction will likely be determined by tonight's ADP data and Friday's NFP report.(asd)
Source: Newsmaker.id
