Gold Soars, Iran Deal Pressures US Dollar
Gold prices rose sharply on Thursday (June 11th) after US President Donald Trump stated that the United States and Iran were close to a deal that could reopen shipping through the Strait of Hormuz. XAU/USD traded around US$4,212/oz, up more than 3%, after falling to US$4,023/oz in the previous session.
The main catalyst came from changing geopolitical sentiment. Trump said a deal with Iran could be signed as early as this weekend, while a report from Fars said the chances of approval of the text of the deal increased after the US accepted Iran's proposal. If Hormuz were reopened, pressure on oil prices could ease and the risk of energy inflation would also decrease.
The US dollar weakened after the market reduced demand for safe-haven assets. The DXY fell to around 99.66, providing an additional boost to gold as the metal became cheaper for non-dollar buyers. Reuters also reported that the dollar and oil weakened after Trump canceled plans to attack Iran, while risk assets strengthened.
Despite the rebound in gold, fundamental pressures have not completely disappeared. US PPI data for May rose 6.5% YoY, higher than 5.7% in April and slightly above the 6.4% estimate. However, the core PPI remained at 4.9% YoY, lower than the consensus of 5.4%, suggesting that core inflationary pressures were not as severe as feared.
Labor data also signaled mild weakness. Initial jobless claims rose to 229,000, above expectations of 219,000. The combination of a strong headline PPI, a more subdued core PPI, and rising jobless claims has led the market to believe the Fed is likely to be cautious, although expectations of a rate hike towards the end of 2026 remain intact.
Currently, gold's recovery is largely supported by a weaker dollar and the easing risk of a US attack on Iran. However, its future direction still depends on confirmation of the deal, the opening of Hormuz, Michigan consumer sentiment data, and the Fed's signals. As long as the price remains above the US$4,200 area, the market will be watching to see whether this rebound is merely short-covering or the beginning of a broader stabilization. (Arl)*
Source: Newsmaker.id
