Strong US Data Pressures Gold, Hormuz Remains Hot
Gold (XAU/USD) moved with a negative bias on Tuesday (April 21st) and remained directionless, as the market held aggressive positions amid uncertainty over whether US-Iran peace talks would resume after tensions in the Strait of Hormuz escalated again late last week. XAU/USD traded around US$4,748, down nearly 1.5% on the day, pressured by a moderate strengthening US dollar.
Pressure also came from stronger-than-expected US data. March Retail Sales rose 1.7% (MoM), beating the 1.4% estimate and up from 0.7% in February. The four-week average of ADP Employment Change also rose to 54.8,000 from 39,000. The solid data limited the dollar's weakness and put pressure on the precious metal.
On the geopolitical front, the outlook for the second round of US-Iran talks in Pakistan remains uncertain. Several reports suggested Iran was sending a delegation, but Iranian state media denied any delegation had departed. With the two-week ceasefire ending Wednesday, the market is increasingly sensitive. Trump said it was unlikely he would extend the ceasefire and asserted that Hormuz would not be opened until an agreement was reached, while warning that the conflict could resume if no deal was reached. From Tehran, Mohammad Bagher Ghalibaf stated that Iran would not negotiate "under the shadow of threats" and was preparing "new cards" on the battlefield.
Meanwhile, the disruption of Hormuz under the "dual blockade" of the US and Iran kept oil prices high, maintaining inflation risks and reinforcing expectations of prolonged high interest rates from central banks, including the Fed. This condition typically weighs on gold because the opportunity cost of holding non-yielding assets rises when yields and expectations of tighter policy strengthen—although geopolitical risks remain a cushion, keeping movements range-bound.
Market participants are now awaiting catalysts from developments in the US-Iran negotiations and a decision on extending the ceasefire, as well as the direction of the dollar, oil, and Fed policy signals—including Kevin Warsh's statement that the Fed needs a "new inflation framework" and a change in policy regime. (Arl)*
Source: Newsmaker.id
