Gold prices weakened again for a second day after new attacks on ships in the Strait of Hormuz sparked market concerns. The Strait is a vital shipping route for global oil and natural gas, so security concerns in the region immediately caught investors’ attention.
Gold briefly fell as much as 1.2% to below US$4,120 per troy ounce, after also weakening 0.3% on Monday. Pressure arose after an LNG tanker was reportedly hit by a projectile near Oman. Additionally, Axios reported that Iran fired at least two missiles at commercial vessels passing through the Strait of Hormuz.
The rise in oil prices due to these incidents has rekindled inflation concerns. If energy prices rise, inflationary pressures could also increase. This could increase the likelihood that the Federal Reserve will maintain its tight stance or even open the door to interest rate hikes, which is negative for gold as it offers no yield.
Despite the decline, gold’s movement remains within a relatively narrow range. Investors are now awaiting the minutes of the Fed’s June meeting, which will be released this week. The document will be a key indicator of whether the Fed remains hawkish or is becoming more cautious following last week’s weak US employment data.
Technically, gold is still trying to hold above the psychological level of US$4,000 after previously falling below that level. Bargain hunting, or buying on price declines, has helped gold rise above its 10-day moving average. However, resistance is still visible around US$4,180, while technical support is above US$4,130.
At 2:50 p.m. Singapore time, spot gold fell 0.8% to US$4,130.61 per troy ounce. Silver weakened 1.4% to US$61.21 per ounce, while platinum and palladium also fell. Meanwhile, the Bloomberg Dollar Spot Index rose 0.1%, adding pressure on gold prices.
Source: Newsmaker.id