Gold Corrects, Energy Inflation Still Looms
Gold prices remained under pressure on Friday (April 10) but remained on track for weekly gains, buoyed by uncertainty surrounding the fragile US-Iran ceasefire ahead of potential talks later this week. Spot gold fell 0.4% to US$4,748.45/oz at 5:47 a.m. ET, while US gold futures fell 1.0% to US$4,772.07/oz.
On a weekly basis, bullion is expected to rise around 1.6%—its third consecutive weekly gain—although prices remain below three-week peaks. Markets believe geopolitical risks have not disappeared, particularly after Israel's continued military activity in Lebanon resurfaced and renewed disagreements over whether Lebanon is covered by the ceasefire agreement.
Israel reportedly struck Hezbollah targets in Lebanon again on Friday, complicating the prospects for US-Iran talks in Pakistan, which are anticipated to begin Saturday. Iranian media reported that Tehran denied that a delegation had arrived in Islamabad and stated that talks remained on hold as long as the Israeli offensive in Lebanon continues.
On the energy front, the Strait of Hormuz remains largely closed, hampering the normalization of supply flows. Although oil prices fell this week after previously surging near US$120/barrel and remaining above US$100 for several weeks, high energy levels have raised inflation concerns and resurfaced a scenario of prolonged high interest rates—an environment that typically limits gold's performance due to its lack of yield. The US dollar is also a key variable: the dollar index's weakening of more than 1% over the week helped contain gold's correction through valuation effects for non-US buyers.
The market's next focus is on Friday's US CPI release, which is expected to show an acceleration in headline inflation due to surging gasoline prices (the national average above US$4/gallon for the first time in more than three years) and rising diesel prices, while the core CPI is projected to moderate. Key monitoring variables include the outcome of the Pakistan talks, the status of Hormuz, the direction of oil prices, and the Fed's response to the inflation data.
Source: Newsmaker.id
