Gold Trades Sideways, Markets Test Conflict Remain Under Control
Gold held a weak tone in Asian trading Wednesday after renewed clashes in the Persian Gulf further dampened hopes for a quick breakthrough in a US-Iran peace deal. Bullion traded just above US$4,500 per ounce after falling 1.4% on Tuesday, while US Secretary of State Marco Rubio said any pact would likely take several days to finalize.
Tensions around the Strait of Hormuz emerged as both sides continued to signal progress toward an interim agreement. At the same time, the market began to consider the conflict scenario as "limited," prompting some market participants to return to risk and pushing equities to new highs. This combination kept gold on the defensive but without a strong boost, as risk-on sentiment limited hedging demand.
From a fundamental perspective, the factors weighing most heavily on gold are inflation and interest rate channels. Energy surges during the conflict heightened inflation concerns and led markets to raise bets on tighter policy, which typically pressures non-yielding assets like gold. TD Securities believes that deal optimism provides a cushion, but the situation remains fragile and pricing remains skewed to the downside.
Concerns about the impact of energy inflation were also reflected in comments from authorities, including Bank of Japan Governor Kazuo Ueda's warning that rising oil prices could worsen Japan's inflation outlook. Analysts believe the latest inflation readings in major economies reinforce expectations that the central bank will maintain its hawkish stance for longer, even opening the door to further price increases. At 12:49 p.m. Singapore time, spot gold was relatively stable at US$4,514.36 per ounce; silver fell slightly to US$76.97, while the dollar was flat.
Source: Newsmaker.id
