Gold Breaks US$4,000, The Fed Becomes a Burden
The price of gold remained below the level of US$4,000 per troy ounce in trading Friday (17/7) and is on track for a weekly decline of more than 3%. The main pressure came from escalating tensions in the Middle East which pushed oil prices up and again sparked inflation concerns.
The United States launched several attacks on Iran throughout this week. President Donald Trump also warned that the US could target Iranian infrastructure next week if diplomatic efforts do not produce a breakthrough.
Iran responded by launching attacks on US bases in a number of neighboring countries. This escalation makes the market worried that the conflict could last longer and disrupt energy supplies from the Middle East region.
On the other hand, lower-than-expected US inflation data this week makes the chances of the Fed increasing interest rates in July smaller. However, Fed Chair Kevin Warsh continued to emphasize his commitment to returning inflation to target and maintaining price stability.
The impact on the market is that gold is still under pressure because investors assess that the risk of energy inflation could make the Fed remain cautious. As long as the market is still divided about the possibility of an interest rate increase in September, gold as a non-yielding asset has the potential to find it difficult to recover strongly, especially if the dollar and yields strengthen again. (asd)
Source: Newsmaker.id
