Gold Retreats from Four-Week High, Dollar Recovers Slightly
Gold prices (XAU/USD) continued their correction from a near four-week high touched during Wednesday's Asian session. Gold fell to around US$4,815 after failing to maintain early-day gains.
The weakening occurred as the US dollar recovered modestly from its lowest level since early March, pressuring commodities. The USD's recovery came as markets assessed that risks in the Strait of Hormuz remained vulnerable, despite hopes for successful diplomacy that had driven the dollar's earlier weakness.
Geopolitically, threats remain high after the US blockade, which began on Monday, was rejected by Tehran, with Iran's ambassador to the UN calling the move a violation of its oversight. Furthermore, the IRGC stated that it would engage in negotiations, keeping regional risks a factor influencing safe-haven flows.
Nevertheless, gold's weakness is considered potentially limited as the market still sees diplomatic channels as not closed. US Vice President JD Vance struck a cautiously optimistic tone, undermining efforts for a broader agreement on Iran's economic integration, while UN Secretary-General António Guterres said the chances of resuming US-Iran negotiations were high.
From a macro perspective, weaker-than-expected US PPI data also curbed the USD's strength, as it reduced expectations of a more hawkish Fed policy stance. The annual PPI rose to 4% in March from 3.4%, while the monthly PPI was 0.5%, and the core measure indicated price pressures were also undervalued. The decline in US bond yields following this data has the potential to save gold, opening up opportunities for buyers during a price correction.
5 key points from the narrative:
- Gold fell to around US$4,815 after hitting a nearly four-week peak.
- The USD recovered slightly from its lowest level since early March, pressuring XAU/USD.
- Hormuz risks remain high: US blockade rejected by Iran, IRGC, and retaliation.
- Diplomatic hopes persist: Vance is cautiously optimistic, Guterres considers speaking "very likely."
- A below-expected US PPI is putting downward pressure on yields and expectations of a hawkish Fed, potentially limiting gold's decline. (asd)*
Source: Newsmaker.id
