Gold Recovers Slightly, Weekly Trend Remains Weak
Gold prices rose slightly on Friday (June 12th), but still recorded a weekly decline as the market continued to weigh two major factors: hopes for a US-Iran peace deal and expectations of high interest rates ahead of a series of central bank decisions next week.
Spot gold rose 0.2% to close at US$4,218.91/oz, while gold futures rose 3.1% to US$4,239.75/oz. However, for the week, spot prices are still down 2.6%, and futures are down 2.9%, indicating that the weekend's recovery has not been enough to erase the previous pressure.
Gold sentiment was briefly boosted after President Donald Trump said a peace deal with Iran had been agreed and could be signed as soon as the weekend. The agreement is said to reopen the Strait of Hormuz, end the US naval blockade of Iran, and ensure Iran does not acquire nuclear weapons.
However, certainty about the deal remains elusive. Trump again criticized Iran after Iranian media reported the contents of the memorandum, which purportedly included the release of frozen funds and nuclear-economic discussions without addressing the missile program. Meanwhile, Iranian Foreign Minister Abbas Araghchi stated that the memorandum had never been closer, while Pakistan, acting as mediator, stated that the final text had been agreed upon and the process was entering the next phase.
For gold, these developments created a tug-of-war. Peace hopes weighed on oil prices and reduced the risk of energy inflation, but also reduced some safe-haven demand. At the same time, US CPI and PPI data this week showed that headline inflation remained high, so the market is still pricing in the possibility of the Fed maintaining its tight policy or even raising interest rates.
Market focus now shifts to next week's Fed decision, the first meeting under Kevin Warsh's leadership. JPMorgan expects interest rates to remain in the 3.5%–3.75% range, but inflation that remains well above target and a solid labor market could encourage a more hawkish policy tone. As long as the prospect of high interest rates remains strong, gold's upside remains limited, even as the dollar weakens and geopolitical risks begin to subside. (arl)*
Source: Newsmaker.id
