Gold Approaches $4,000 Support, Fed Decision a Key Test
Gold prices weakened on Tuesday (July 28th) as a strengthening US dollar weighed on demand for the precious metal. XAU/USD traded around US$4,034 per troy ounce, down 1% after failing to maintain gains above US$4,100 on Monday.
Safety asset sentiment also eased after hopes for a deal between the United States and Iran emerged. US President Donald Trump stated that talks were progressing positively, although Iran denied direct negotiations. Oman also proposed joint management of the Strait of Hormuz through a voluntary fee scheme.
WTI oil prices fell to around US$80.15 per barrel, recording a third consecutive day of decline. Despite erasing all of the previous week's gains, oil prices remain relatively high, so concerns about inflationary pressures have not fully subsided.
Market focus now turns to the Federal Reserve's interest rate decision on Wednesday. The Fed is expected to maintain interest rates in the 3.50%–3.75% range, but the market still rates a 35% chance of a 25 basis point hike. Fed Chairman Kevin Warsh's hawkish stance makes the US$4,000 level a key support for gold.
Market Impact
Gold has the potential to break below US$4,000 if the Fed raises interest rates or signals further tightening. Conversely, prices could recover if interest rates are maintained and Kevin Warsh's statement is softer than expected. Dollar movements, US bond yields, and developments in the US-Iran conflict remain key determinants of gold's direction.
Source: Newsmaker.id
