Gold Fails to Struggle in Asia!
Gold prices (XAU/USD) fell on Thursday (May 21), driven by a stronger US dollar supported by hawkish sentiment from the Federal Reserve. Bullion failed to capitalize on the slight gains in the Asian session, hovering around $4,450, its lowest level since March 30.
Minutes from the Fed's April 28-29 meeting showed that a majority of policymakers considered an interest rate hike possible if inflation remained above the 2% target. Skewed inflation risks and Middle East tensions kept the dollar strong, limiting gold's upside.
The CME Group FedWatch tool noted that the market gave the Fed a greater than 50% chance of a 25 basis point rate hike in 2026, supporting the USD and pressuring non-yielding bullion.
Optimistic signals emerged from statements by Trump and Vice President JD Vance that Iran wanted to reach a deal, which boosted investor confidence and provided some support for gold. However, Trump's statement about possible military action if Iran rejects the deal capped this positive sentiment.
Iran has defied US threats and warned that a new attack by the US or Israel could escalate the conflict. The country has also established a "Persian Gulf Strait Authority" to control traffic in the Strait of Hormuz, keeping geopolitical risks high.
This geopolitical uncertainty has kept gold prices relatively stable despite the strong dollar, requiring caution for investors targeting bullion gains in the short term.
Key Points:
- Gold fell to around $4,450, its lowest since March 30.
- The US dollar strengthened amid hawkish sentiment from the Fed.
- Markets are pricing in a possible 25 bps interest rate hike in 2026.
- US-Iran optimism provided some support, but was limited by military threats.
- Strait of Hormuz geopolitics limits significant gold movements. (asd)
Source: Newsmaker.id
