Gold Posts Weekly Decline, Oil and the Fed Under Pressure
Gold prices fell to around US$3,970 per troy ounce in trading on Friday (July 17). Over the week, gold has weakened more than 3% as tensions between the United States and Iran pushed oil prices higher again.
Rising oil prices have fueled concerns that inflationary pressures could rise again. This has reinforced expectations that the Federal Reserve will maintain high interest rates for longer to keep inflation under control.
Geopolitical tensions escalated after Tehran launched new attacks on United States facilities in the Middle East. The attacks followed the US's sixth consecutive night of attacks on Iranian military targets, which also disrupted shipping through the Strait of Hormuz.
Hawkish signals from Fed officials also added pressure on gold. Dallas Fed President Lorie Logan announced an additional interest rate hike, while Fed Vice Chairman Philip Jefferson stated his readiness to support tighter policy if inflation does not increase in the near future.
The market now rates a roughly 50% chance that the Fed will raise interest rates in September. Data-wise, US consumer prices and producer prices both fell in June, primarily due to lower energy costs. However, import prices unexpectedly rose.
In terms of market impact, gold risks remain under pressure as long as oil prices remain high and Fed rate expectations remain strong. If the US dollar and Treasury yields strengthen again, XAU/USD could struggle to return above US$4,000. However, if geopolitical tensions worsen, safe-haven demand could prevent further declines in gold. (asd)*
Source: Newsmaker.id
