Gold Rebounds, Gains Remain Limited
Gold prices rose slightly at the start of the week, halting a three-day losing streak from a more than one-week low. However, XAU/USD's gains remained limited as market participants remained uncertain about returning to safe-haven territory.
Support for gold came from falling oil prices after Qatar and Pakistan announced a 60-day roadmap to reach a final agreement between the US and Iran. If the diplomatic process proceeds, the risk of energy supply disruptions could decrease, thereby easing inflationary pressures and the need for aggressive interest rate hikes.
However, geopolitical risks remain. Iran has accused the US and Israel of violating the ceasefire, while Tehran has re-announced the closure of the Strait of Hormuz, citing ongoing Israeli attacks on Lebanon. US President Donald Trump has also threatened new military action against Iran if Hezbollah continues its attacks on Israel.
These conditions have maintained safe-haven demand, but not strong enough to drive a convincing rally in gold. Meanwhile, the US dollar continues to receive support from geopolitical uncertainty and Russia's escalating attacks on major Ukrainian cities, keeping gold's gains contained.
The biggest factor limiting gold remains the Federal Reserve. The market still rates a nearly 90% chance that the Fed will raise interest rates before the end of the year, after recent projections indicated the central bank could act if inflation remains stubbornly low. Fed Chairman Kevin Warsh also emphasized price stability, signaling that policy easing is not yet a priority.
For gold, the combination of a hawkish Fed and a strong dollar poses a major headwind, as the precious metal offers no yield. Market focus will next be on US-Iran developments, shipping flows in the Strait of Hormuz, comments from FOMC officials, and the direction of the US dollar. As long as expectations of interest rate hikes remain high, gold's recovery is potentially fragile, although geopolitical risks continue to support defensive demand. (asd)
Source: Newsmaker.id
