Gold Continues to Rise as Fed Rate Hike Expectations Ease
Gold prices extended their gains during midday trading, moving above US$4,130 per troy ounce. The rise followed gold's successful breach of the psychological US$4,100 level, attracting fresh buying from market participants and triggering the covering of short positions.
The primary driver of the rally was the easing of concerns regarding energy-driven inflation. Hopes for a deal to reopen the Strait of Hormuz caused oil prices to drop sharply, with Brent crude moving toward the US$78–US$79 per barrel range.
Lower oil prices are expected to alleviate inflationary pressure in the United States. This development led the market to lower its expectations for Federal Reserve interest rate hikes, causing US government bond yields to decline.
Falling yields serve as a positive factor for gold, as the precious metal does not generate interest income. Simultaneously, the US dollar has been sluggish, making gold more affordable for investors using other currencies.
Additional support stemmed from buying by Chinese institutional investors and inflows into gold-backed ETFs. Technical sentiment also strengthened after prices surpassed US$4,100, prompting market participants to snap up gold ahead of the release of US labor market data.
Newsmaker Analysis: As long as gold holds above the US$4,100–US$4,110 range, there remains potential for further gains toward US$4,150 and subsequently US$4,180. However, hawkish comments from Fed officials or stronger-than-expected labor data could trigger profit-taking, pushing prices back toward the US$4,100–US$4,080 level. (asd)*
Source: Newsmaker.id
