Gold Weakens for 3 Sessions, Market Reprices "Higher for Longer"
Gold prices continued their decline on Wednesday (April 29th) as the market remained focused on the prospects for US-Iran talks, while the ongoing closure of the Strait of Hormuz maintained the risk of energy inflation. Bullion briefly fell as much as 1.9% to just above US$4,500/oz, after falling 2.4% in the previous two sessions.
Pressure came from a combination of geopolitics and policy. The US signaled it would maintain a naval blockade of Iranian ports to suppress Tehran's oil exports and force a return to the negotiating table. Meanwhile, mediators in Pakistan are said to be waiting for Iran to submit a revised proposal in the next few days, keeping the market headline-driven and volatile.
The transmission channels are primarily through energy and interest rates. Energy supply shocks are fueling inflation concerns, increasing the likelihood that central banks will keep interest rates higher for longer or even consider tightening again, which is usually a burden on gold because it does not provide a yield. The rise in yields also raised the opportunity cost of holding gold, while the metal has fallen by around 13% since the conflict broke out in late February.
From a technical perspective, selling is said to have intensified after prices broke through the support area around US$4,650, with market attention focused on whether the reopening of Hormuz could lower oil prices and ease inflationary pressures as a catalyst for a short-term recovery. At 4:15 p.m. London time, spot gold fell 1.3% to US$4,537.21/oz; silver fell 2.1% to US$71.55/oz, while the Bloomberg Dollar Index rose 0.2%.
The next focus will be concrete signals regarding the continuation of US-Iran mediation, oil dynamics, and interest rate decisions in the US, Europe, and the UK, which will shape the direction of the dollar and yields. (Arl)*
Source: Newsmaker.id
