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Gold
Source: Newsmaker.id
Gold prices strengthened again during Friday's trading (Sept 18), extending a recovery after previously hitting a six-week low. Spot gold (XAU/USD) was recently trading around US$4,343 per troy ounce during the Asian session, supported by a weakening US dollar and falling oil prices, which have begun to ease global inflationary pressures.
The drop in oil prices has been a factor aiding gold's recovery. Energy prices softened following signs that supply disruptions in the Middle East might ease, as Saudi Arabia works to restore some oil flow through a strategic pipeline. This development has alleviated market concerns regarding inflation driven by rising energy costs.
Additionally, geopolitical developments in the Middle East remain a focus for investors. US President Donald Trump is scheduled to meet with Gulf state leaders on the sidelines of the UN General Assembly in New York to discuss the evolving conflict with Iran. Hopes for a negotiated solution have helped soothe market tensions, although geopolitical risks continue to support demand for gold as a safe-haven asset.
On the other hand, gold's upward momentum faces headwinds from the Federal Reserve's persistently tight monetary policy. The Fed raised interest rates by 25 basis points to a range of 3.75%–4.00% and signaled that further hikes could occur this year. Market expectations for another rate hike at the October meeting have also risen, potentially limiting the scope for gold to strengthen further.
Following the Fed's decision, gold initially came under pressure due to a strengthening US dollar and rising Treasury yields. However, as the dollar began to weaken and yields retreated from their highs, the pressure on gold eased. These conditions have prompted investors to reconsider gold as a hedge amidst economic and geopolitical uncertainties. Newsmaker Analysis: Today’s rise in gold prices indicates that the market is beginning to balance the impact of the Fed's hawkish stance against supporting factors such as a weakening dollar, falling yields, and geopolitical risks. In the short term, gold remains sensitive to the direction of US interest rates and dollar movements. If the Fed maintains its aggressive stance, the scope for gold's gains may be limited. However, as US economic data softens and pressure on the dollar eases, gold retains the potential to continue its recovery. (asd)