Gold Recovers Slightly, Oil Drops Ease Inflation Pressure
Spot gold prices edged higher on Thursday after oil prices reversed their decline, alleviating some market concerns about an energy-driven surge in inflation.
At 5:29 a.m. Eastern Time, spot gold rose 0.2% to US$4,079.70/oz, after hitting a more than six-month low. However, gold futures were still down 0.8% to US$4,100.65/oz.
This limited recovery came after reports that the United States and Iran were continuing peace talks, despite the two sides exchanging barbs for a second day. Reuters also reported that Washington and Tehran were still discussing a preliminary agreement, including a mechanism for releasing frozen Iranian funds. These diplomatic signals have eased pressure on oil.
However, uncertainty remains. President Donald Trump has warned of further action if Iran does not immediately accept the deal. The US previously attacked several Iranian military targets, calling it an act of "self-defense," following the downing of an American helicopter near the Strait of Hormuz. Iran then reportedly retaliated with attacks on US and allied bases in the Gulf region.
For gold, the decline in oil is a supportive factor because it can alleviate concerns about energy inflation. If oil prices subside, pressure on central banks to raise interest rates could also ease. However, this support is still limited because oil prices remain well above pre-war levels and the risk of disruption to the Strait of Hormuz has not been fully resolved.
US inflation data also remains a burden. The latest CPI showed the hottest pace of consumer price increases in years, mainly due to surging gasoline costs. The market is now awaiting US Producer Price Index (PPI) data to determine whether price pressures from the producer side have also increased and how this will impact Fed policy expectations.
Overall, gold remains in a fragile phase. Weakening oil provides room for a short-term recovery, but the strengthening US dollar to around 100.09, expectations of a Fed rate hike before the end of 2026, and the potential for an ECB interest rate hike continue to limit the precious metal's upside. The next market focus will be the US PPI, the direction of oil, developments in US-Iran negotiations, and the movement of the dollar.
Source: newsmaker.id
