Gold Pauses After Hitting Two-Month Low
Gold prices (XAU/USD) were flat during Friday's Asian session, holding around the psychological level of $4,500. The precious metal briefly bounced from the $4,367–$4,366 area, considered its lowest level since March 27, but the gains were not sustained as market participants held their positions awaiting further news on the US-Iran front.
Sentiment improved after reports that the US and Iran had reached a draft agreement to extend the ceasefire for 60 days and open negotiations on Iran's nuclear program. Hopes of reduced risks of disruption in the region, including the Strait of Hormuz, contributed to pressure on oil prices, easing concerns about energy-related inflation.
However, the direction of the negotiations remains uncertain, as the proposal reportedly still requires President Donald Trump's final approval. The market also remains skeptical that a deal will truly end the three-month-old conflict, given significant differences over the nuclear issue and the Strait of Hormuz. This uncertainty has prevented the dollar from weakening further, while also limiting gold's upside.
Data-wise, US inflation is a key driver. The BEA reported that the PCE price index rose to 3.8% (YoY) in April from 3.5% previously, while core PCE stood at 3.3%, as expected. This data reinforces the view that the Fed could maintain high interest rates for longer, amid a revision to US economic growth in the first quarter of 2026 to 1.6% (annualized) from the initial estimate of 2.0%. Market participants also still see the possibility of future interest rate hikes, including a probability of around 50% for a 25 bps increase in 2026 according to FedWatch.
The combination of resurgent inflation and geopolitical uncertainty has kept gold trading within a narrow range. The market's next focus will be on clarity regarding the approval and implementation of the US-Iran deal, dynamics in the Strait of Hormuz that impact oil, and the consistency of inflation data that shapes Fed policy expectations. (asd)*
Source: Newsmaker.id
