"Elevated energy costs, driven by the tensions in the Middle East, are fuelling concerns about global inflation, reducing the likelihood of near-term interest rate cuts by major central banks. This dynamic has strengthened the US dollar and pushed Treasury yields higher, weighing on non-yielding assets such as gold."
"Ongoing geopolitical tensions in Eastern Europe, which show little sign of a diplomatic breakthrough, continue to provide support for gold. In addition, sustained central bank purchases also constitute an underlying floor for the precious metal, securing the potential for long-term gains."
"While signs of disinflation could support gold, the delayed nature of the data could potentially limit the immediate reaction as markets remain focused on the recent surge in energy prices."
Gold remains in a consolidation range around USD 5,180 per ounce, caught between opposing market forces. Middle East tensions have elevated energy costs, increasing inflation concerns and reducing expectations for near-term interest rate cuts from major central banks. This has strengthened the US dollar and raised Treasury yields, pressuring gold as a non-yielding asset. Conversely, ongoing geopolitical tensions in Eastern Europe and sustained central bank purchases provide support for gold prices. The upcoming US PCE inflation report may influence near-term direction, though market focus on recent energy price surges could limit immediate reactions to disinflation signals.
Read at London Business News | Londonlovesbusiness.com
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