Gold Fluctuates Wildly, Market Confused About Iran
Gold prices fluctuated on Thursday after the United States completed a new round of attacks on Iran. Gold prices briefly reversed sharply, rising as much as 1.1% in choppy trading, after previously falling by almost the same amount and approaching the US$4,000/oz area.
At 2:33 p.m. Singapore time, spot gold rose 0.4% to US$4,086.40/oz. Silver also strengthened 0.7% to US$63.80/oz, while platinum and palladium also moved higher. The Bloomberg Dollar Index remained relatively unchanged, leaving gold's movements largely influenced by geopolitical headlines and investor repositioning.
The latest escalation occurred after the US military announced it had completed an attack on targets in Iran. President Donald Trump had previously accused Tehran of delaying temporary peace talks for too long. In response, Iran announced the closure of the Strait of Hormuz to all shipping, immediately heightening concerns about global energy flows.
For gold, this conflict creates two-way tensions. On the one hand, geopolitical tensions could increase demand for safe havens. However, on the other hand, disruptions in Hormuz have driven up oil prices, heightening inflation risks and increasing the likelihood of central banks maintaining or raising interest rates. This channel is a burden for gold because the metal offers no yield.
US inflation data also reinforced fundamental pressures. May's CPI rose 0.5% month-on-month and 4.2% year-on-year, the fastest pace since early 2023. Gold had already fallen more than 4% in the previous session following the data and is now about 23% below its pre-war level in late February.
Technically and from a market perspective, the risk to gold remains tilted to the downside. A drop below the 200-day moving average has triggered additional selling pressure, while open interest on Comex gold futures has fallen to its lowest level since 2009. This thinner liquidity makes prices more susceptible to sharp movements. For now, gold's weakness reflects deleveraging and portfolio repositioning, rather than a complete loss of gold's function as a hedging asset. (asd)
Source: Newsmaker.id
