Geopolitical winds in gold prices: Volatility continues

Global markets have entered a new period of activity as tensions between the US and Iran escalate in the Middle East. While the rise in oil prices has unsettled gold investors, the spot price of gold per ounce fell by 0.6 percent to 4,034.42 dollars. This recent volatility has emerged as one of the primary factors determining the direction of currency and commodity markets.

The rapid increase in oil prices following consecutive attacks in the region has weakened hopes for a recovery in global inflation. Evaluating the situation, IndusInd Securities Senior Research Analyst Jigar Trivedi stated that oil has shown a strong upward trend for most of the week, which has begun to put pressure on investors.

The US conducting attacks targeting Iran's coastal defense systems and missile launchers within two days, along with new blockade measures at ocean-linked ports, has increased concerns regarding both trade and global energy flows. Meanwhile, Iranian officials have threatened counter-moves against American bases stationed in the region and characterized the ongoing process as an "existential war with the US."

In light of these developments, geopolitical risks have once again begun to shape pricing.

FED'S INTEREST RATE POLICY AND INFLATION EXPECTATIONS

Jigar Trivedi pointed out that the inflation data released last month was not fully affected by the new tensions in West Asia, noting that the rise in energy costs could bring inflationary pressure back to the agenda in the coming periods. Emphasizing that the temporary ceasefire implemented last month has effectively ended, Trivedi stated that the volatility in the energy market could be reflected more clearly in future reports.

Although a slowdown was observed in both consumer and producer price increases in the US in June due to cheaper energy, experts point out that the rising oil prices of recent weeks have not yet been reflected in the data.

In this environment, expectations regarding the US Federal Reserve's (Fed) interest rate policy are also taking shape. Futures markets continue to see a 73 percent probability of an interest rate hike for December. Along with Fed Board Member Lisa Cook's statement that "what is necessary will be done if inflation does not retreat in the short term," Fed Chair Kevin Warsh's determined stance on fighting inflation also drew attention.

Investors and market experts continue to monitor both geopolitical developments in the Middle East and the American Central Bank's roadmap as the main agenda items in their decision-making processes.

News Source: 12punto