Gold Rises as Energy Pressures Ease
Gold prices rose on Tuesday (June 16th), supported by falling oil prices after the US and Iran announced an interim peace deal. The easing of energy pressures helped ease inflation concerns, thus supporting sentiment toward gold.
At 9:29 a.m. ET, spot gold prices rose 0.6% to $4,335.27 per ounce, while gold futures rose 0.1% to $4,354.75 per ounce. This increase extended Monday's more than 2% rally after Washington and Tehran announced a preliminary agreement to end the conflict and reopen the Strait of Hormuz.
The prospect of restored oil flows through this vital waterway weighed on crude prices and eased concerns that the energy boom would again drive global inflation. In macro terms, lower oil prices can ease inflationary pressures, lower expectations of interest rate hikes, and support non-yielding assets like gold.
The US dollar also weakened as risk sentiment improved. During the Middle East conflict, the greenback was seen as a relative safe haven, in part because the US was considered more protected from oil shocks as a major energy exporter. As geopolitical risks eased, some defensive demand for the dollar diminished.
Market expectations for a Fed rate hike this year also began to decline following the announcement of the interim US-Iran agreement. According to the CME FedWatch Tool, the probability of a December rate hike fell to 58% from around 70%, strengthening support for gold through interest rate and US dollar channels.
Market participants are also monitoring a series of major central bank decisions this week. The Bank of Japan raised its short-term policy rate by 25 basis points to 1.0%, its highest level in 31 years, while the Reserve Bank of Australia maintained its benchmark interest rate at 4.35% after three consecutive hikes.
The market's next focus will be on the continuation of the Strait of Hormuz opening, the direction of oil prices, the US dollar's movements, and changes in Fed policy expectations. As long as inflationary pressures from energy subside and the dollar remains weak, gold will remain supported, although its room for movement could be influenced by central bank signals in the coming days. (arl)
Source: Newsmaker.id
