Gold starts the week with a decline: All eyes on the US-Iran front
Gold began the first day of the new week with a decline as the dollar strengthened in global markets. Investors are focused on the decision US President Trump will make regarding the future of the ceasefire with Iran.
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In the spot market, gold per ounce retreated by 0.4% to $4,518.09. US gold futures for August delivery, which reached a two-week high in the previous session, traded at $4,548.90, down 1%. The strengthening of the dollar has made gold more expensive for investors trading in other currencies.
Tim Waterer, Chief Market Analyst at KCM Trade, stated that the rise in oil prices and the uncertainty between the US and Iran are putting pressure on gold. Waterer noted, "The rise in oil prices and the lack of clarity regarding the US-Iran agreement are preventing gold from finding a clear direction at the start of the week."
US President Trump announced in a statement last Friday that he would soon disclose his decision regarding the agreement to extend the ceasefire with Iran. However, it is noted that disagreements between the parties persist.
Tensions in the Middle East also remain high. Despite the current ceasefire, Israeli Prime Minister Benjamin Netanyahu has ordered troops to advance further inland in operations against Hezbollah in Lebanon. The fact that oil prices rose by more than 2% on Monday morning has also brought concerns about inflation and expectations of US interest rate hikes back to the agenda.
Michelle Bowman, Vice Chair for Supervision at the US Federal Reserve (Fed), said that the economic effects of the ongoing conflicts in the Middle East persist, and that these developments could create persistent inflationary pressures and necessitate a tighter monetary policy.
Gold is traditionally known as an investment vehicle that acts as a hedge against inflation. However, high interest rates on a global scale can reduce the appeal of gold as a non-interest-bearing asset.
Analyst Waterer shared his forecast that if oil prices ease and the dollar loses value, gold could see the $5,500 level by the end of the year, thanks to strong buying by central banks.
In the precious metals market, an upward trend was observed. Spot silver reached $75.58 with a 0.4% increase, while platinum gained 1.1% and palladium rose by 1.2%.