Gold Falls to Lowest Level, Market Awaits Fed Signals
Gold prices fell to their lowest level in a month as investors weighed the Federal Reserve's interest rate cut path against the risk of renewed inflation due to the war in the Middle East. Bullion fell below US$5,000 an ounce, with the market awaiting the Fed's policy meeting on Wednesday and particularly looking to Jerome Powell for comments on rising energy costs and a weakening labor market. Meanwhile, oil held above US$100 a barrel, a previous low.
Geopolitical tensions remained high. Iran's attacks on Israel and Arab states in the Persian Gulf continued Wednesday, while President Donald Trump stated that the US could end the war "very soon." Tehran retaliated for the death of its security chief, Ali Larijani, and traffic through the Strait of Hormuz remained virtually halted, maintaining significant energy supply risks and price volatility.
The supply crunch and expensive oil have raised inflation concerns while reducing the prospect of an imminent interest rate cut—a combination that typically weighs on gold because the precious metal does not offer an unbalanced yield. Despite weakening momentum in recent weeks, gold is still up around 15% year-to-date, supported by safe-haven demand, geopolitical risks, and the issue of the Fed's independence. Stagflation concerns also have the potential to maintain gold's appeal as a store of value over the longer term.
At 11:10 a.m. London time, spot gold fell 1% to US$4,956.53 per ounce, its lowest since February 18. Silver fell 0.4% to US$78.95, while platinum and palladium also weakened; the Bloomberg Dollar Spot Index remained relatively stable. (alg)
Source: Newsmaker.id
