Gold Hits 6-Week Low, Fed Hawkish Pressure on Prices
Gold prices fell to around US$4,750/ounce on Thursday, weakening for the seventh straight session and hitting a nearly six-week low. The main pressure came from the Fed's more hawkish outlook, which reduced gold's appeal as a non-yielding asset.
The Fed kept interest rates unchanged but emphasized that the economic impact of the Iran conflict remained uncertain and highlighted the persistent risk of rising inflation. Policymakers signaled that rate cuts would be held off until there was clearer evidence that price pressures were easing, although the Fed's projections still indicated one cut this year.
Geopolitically, tensions escalated after Iran launched a missile attack on a site in Qatar that houses the world's largest liquefied natural gas (LNG) facility, following Israel's attack on Iran's South Pars gas field. This escalation supported safe-haven demand but also pushed up oil prices, rekindling inflation concerns and reinforcing market caution regarding policy easing.
Gold is still up about 12% year-to-date, but momentum has weakened as rate cut expectations fade. Some pressure also comes from selling to meet margin calls, which often arise when cross-asset volatility increases.
Impact & What to Watch
USD & Yields: Hawkish sentiment keeps yields and the dollar strong, which is usually the main brake on gold.
Oil & Energy Inflation: Rising oil prices could prolong inflation risks and dampen the chances of a rate cut.
Geopolitics: Escalation could trigger safe-haven bids, but the effect could be "outweighed" if yields continue to rise.
Liquidity/Margin: If margin calls continue, gold could remain volatile despite haven demand.(CP)
Source: Newsmaker.id
