Gold Nears June Highs; CPI Data Key
Gold prices attracted renewed buying interest during Asian trading on Wednesday (August 12). XAU/USD rose above the US$4,400 per troy ounce mark, nearing the high reached in the previous session—a level not seen since June 5.
Market participants are now awaiting the release of US Consumer Price Index (CPI) data for fresh clues regarding the Federal Reserve's policy direction. This inflation data is considered crucial as it can influence the US dollar, bond yields, and the price of gold, a non-yielding asset.
Meanwhile, oil prices remain firm near one-and-a-half-week highs as hopes for the imminent reopening of the Strait of Hormuz begin to fade. Iran has insisted that the vital waterway will not be reopened until the United States meets Tehran's demands, which include war reparations, the lifting of sanctions, and an end to military threats.
Tensions have also escalated after the Iran-backed Houthi group in Yemen expanded its attacks on vessels in the Red Sea and the Bab el-Mandeb Strait. This situation keeps war risk premiums elevated and raises concerns that rising energy prices could once again put upward pressure on global inflation.
Regarding market impact, gold continues to draw support from geopolitical risks and inflation uncertainty. However, rising oil prices could also reinforce expectations of Federal Reserve interest rate hikes, potentially capping the XAU/USD rally. If US CPI data comes in hotter than expected, the dollar and US yields could strengthen, leaving gold vulnerable to a correction. Conversely, if CPI figures are lower, gold has the potential to maintain its momentum above US$4,400. (gn)
Source: Newsmaker
