Fed & Hormuz Catalysts, Gold Moves Cautiously
Gold prices weakened on Monday (April 27) as investors remained cautious following the weekend's setback in US-Iran diplomacy and ahead of this week's Federal Reserve interest rate decision. At 3:45 p.m. ET, spot gold fell 0.6% to US$4,681.39/oz, while gold futures fell 1% to US$4,694.61/oz, with the market beginning to hold large positions pending the central bank's policy direction.
This week's primary focus is on the Fed's meeting, which ends Wednesday. While the market widely expects interest rates to be on hold, attention will be on how the Fed assesses the economic outlook following the energy shock related to the Iran war. This meeting is also expected to be the last for Fed Chairman Jerome Powell before his term ends on May 15. Powell's replacement, Kevin Warsh, last week made no commitment to cut interest rates—leaving the "lower rates" narrative, which typically supports gold, uncertain.
On the geopolitical front, plans for further US-Iran talks in Pakistan failed after Iranian officials left the country and Washington canceled sending a delegation. However, the market weighed reports that Iran had put forward new proposals, including an offer to ease the effective closure of the Strait of Hormuz without addressing the nuclear issue—which many believe remains at the heart of the dispute. Trump reportedly discussed the impasse with his national security team, and the White House confirmed that the Iranian proposals had been discussed. With the US naval blockade of Iranian ports and the closure of Hormuz still in place, the risk of energy inflation remains high—constraining interest in gold amid expectations of prolonged tight interest rates. (Arl)*
Source: Newsmaker.id
