Gold Holds Weak at US$4,455 as Dollar Strengthens
Gold (XAU/USD) weakened and held near this week's low of around US$4,455 during Wednesday's European session. Pressure came from a stronger US dollar and expectations of tighter monetary policy.
Oil prices rose for a third straight day, reviving inflation concerns. This condition reinforces the view that global interest rates could remain high for longer, which generally weighs on non-yielding assets like gold.
In the Middle East, tensions escalated again after CENTCOM accused the US of conducting a "self-defense" attack on Qeshm Island. Iran then launched missiles and drones at US military facilities in Kuwait and Bahrain, although most were reportedly intercepted, while the escalation between Israel and Hezbollah also continued.
From a diplomatic perspective, US Secretary of State Marco Rubio stated that sanctions on Iran would not be lifted simply for the sake of opening the Strait of Hormuz, and that any easing would be linked to a halt to enriched uranium. US President Donald Trump also called for an indefinite extension of the ceasefire and the continuation of the blockade until negotiations are concluded, which helped maintain the energy risk premium.
Comments from Fed officials added fuel to the "higher for longer" scenario. Cleveland Fed President Beth Hammack reiterated her commitment to lowering inflation to 2% and left room for action if inflation persists.
The market also rates a 25-bps rate hike at the December meeting at over 50%, according to the CME FedWatch Tool. The combination of persistently high yields and a strong dollar are key factors holding back gold's recovery, with market attention focused on the direction of energy inflation and developments in US-Iran negotiations. (asd)*
Source: Newsmaker.id
