Key Takeaways
- Gold prices rose 0.6% to $4,381.32 per ounce.
- US producer price index data due on Thursday and consumer price index data on Friday will influence the market.
- Iran’s Revolutionary Guard fired missiles at a US military base in Jordan, escalating tensions.
Gold prices strengthened on Wednesday, gaining 0.6% to $4,381.32 per ounce by 0505 GMT, as the US dollar remained relatively weak. This stability in the dollar made gold more affordable for investors holding other currencies.
Kelvin Wong, senior market analyst at OANDA, noted the ongoing tug of war in the gold market, with both bullish and bearish forces at play. He highlighted that the market may continue to fluctuate until the release of the Consumer Price Index (CPI) report later in the week.
The Federal Reserve is expected to raise interest rates at its upcoming policy meeting, with traders giving a 60% chance of such an outcome. However, the dollar’s debasement and concerns over fiscal deficits are expected to support gold prices.
Kelvin Wong also pointed out that the market is closely watching US producer price index data due on Thursday, as rising crude prices tend to increase inflationary pressures. This could further influence the gold market.
Kelly Xu, a commodities strategist at Alpine Macro, stated that precious metals face a near-term test but are unlikely to experience a major selloff. She noted that physical market tightness and structural supply deficits could provide fundamental support for silver over the longer term.
The market is also keeping a close eye on geopolitical tensions, particularly the renewed US-Iran tensions. Iran’s Revolutionary Guard claimed to have fired ballistic missiles at a US military base in Jordan and attacked 10 ships, marking a significant escalation in the ongoing conflict.
These events are expected to keep investors cautious and focused on the interest-rate outlook and inflation data, which will shape the future direction of gold prices.
US gold futures, however, saw a slight decline, losing 0.3% to $4,424.70, reflecting the mixed sentiment in the market.
Other precious metals also showed mixed performance, with platinum rising 1.1% to $1,833.58, while palladium fell 0.1% to $1,347.82, and spot silver gained 0.9% to $66.31.
In the gold market, there is a tug of war in the short term between the bulls and the bears. We may see this kind of movement until the end of this week, when the CPI report is released.
Kelvin Wong, Senior Market Analyst at OANDA
Precious metals face a near-term test, but another major selloff is unlikely.
Kelly Xu, Commodities Strategist at Alpine Macro
