Gold Steady, Dollar Weakens After Yen Intervention Signals!
Gold prices held firm in early Asian trading Friday (May 1) after the US dollar weakened sharply amid reports that Japan might intervene in the foreign exchange market. The weaker dollar helped support gold and cushion pressure from rising inflation risks stemming from the Iran war.
Bullion edged higher to around US$4,619 per ounce after strengthening 1.5% in the previous session. The yen surged more than 2% on Thursday, its biggest daily gain in three years, after the Nikkei reported the Japanese government was buying yen and selling dollars, which typically makes dollar-denominated gold more attractive to non-dollar buyers.
Before rallying late Thursday, gold had fallen for three straight days as the Middle East conflict kept the Strait of Hormuz effectively closed to shipping and there was no progress in peace talks. US President Donald Trump declared a naval blockade of Iranian ports would be maintained, while Iran's supreme leader, Mojtaba Khamenei, reiterated his commitment to maintaining nuclear technology and signaled Tehran would retain control of the strait.
On the macro front, energy supply shocks from the nine-week conflict have heightened inflation risks and strengthened the likelihood of central banks holding interest rates longer or even raising them, which is a drag on gold, as it offers no yield. Gold has fallen about 12% since the conflict began in late February.
At 7:43 a.m. Singapore time, spot gold rose 0.3% to US$4,632.84 per ounce, while the Bloomberg Dollar Index was nearly stable after falling 0.8% on Thursday. Market participants will be monitoring the yen and dollar, energy price dynamics, and signals on interest rate policy, amid divided views: Citigroup believes near-term selling pressure is likely to persist, even though World Gold Council data shows central bank gold purchases in the first quarter increased at the fastest pace in more than a year. (asd)*
Source: Newsmaker.id
