Gold Falters as Inflation Looms
Gold prices retreated during Monday's trading (Aug 10) as the US dollar strengthened again. Spot gold fell approximately 0.2% to US$4,334.55 per troy ounce, while gold futures edged down to around US$4,394.
Pressure on gold mounted as hopes for an agreement to reopen the Strait of Hormuz began to fade. Iran has renewed certain demands on the United States, while President Donald Trump has opted to maintain economic pressure on Tehran.
Uncertainty surrounding the Strait of Hormuz keeps the risk of rising energy prices high. The waterway previously handled about one-fifth of global oil and liquefied natural gas (LNG) trade; consequently, prolonged disruption could once again heighten global inflationary pressures.
Market focus has now shifted to this week's US inflation data. The Consumer Price Index (CPI) will serve as a key indicator of the extent of price pressures stemming from the Middle East conflict and whether the Federal Reserve still needs to consider raising interest rates.
Gold had previously touched its highest level since mid-June after US labor data showed a decline in Non-Farm Payrolls (NFP) for July, alongside downward revisions to figures from the preceding two months. These conditions led the market to scale back expectations for a Federal Reserve rate hike in September.
Newsmaker Analysis: Gold continues to find support from a weakening labor market and central bank demand, though dollar strength and inflation risks linked to the Strait of Hormuz are capping gains. Should the CPI come in lower than expected, gold could rally again. Conversely, high inflation could drive up the dollar and bond yields, pushing gold prices lower. (arl)
Source: Newsmaker.id
