Gold prices remained under pressure, extending losses despite renewed US military strikes against Iran that reignited fears of a broader Middle East conflict. While escalating geopolitical tensions would typically support safe-haven demand, the precious metal struggled to attract sustained buying interest as rising oil prices, a stronger US dollar, and growing inflation concerns weighed on sentiment.
Markets are now positioning cautiously ahead of today’s US CPI release, with expectations pointing to another uptick in inflation. The recent surge in crude oil prices following renewed US-Iran hostilities has heightened concerns that inflationary pressures could remain elevated for longer. If energy prices continue to rise, central banks may be forced to keep interest rates higher for an extended period, potentially slowing economic growth while reducing the appeal of non-yielding assets such as gold. As of 12:20 pm Singapore time, COMEX Gold futures were trading at $4,201.65, down 1.98%.
Adding to the uncertainty are the frequent shifts in rhetoric surrounding ceasefire negotiations. President Trump initially urged Israel to refrain from retaliatory action on Monday, but later authorised fresh strikes following the downing of US aircraft. These conflicting signals have left investors questioning the credibility and sustainability of any potential peace agreement. As a result, many traders have adopted a wait-and-see approach, preferring to remain on the sidelines until greater clarity emerges.
From a technical perspective, gold’s break below its 200-day moving average signals a deterioration in near-term momentum. Immediate support is now seen around the $4,000/oz level, while the broader $4,000-$4,100 zone could attract bargain hunters and central bank buying at relatively attractive prices. However, despite the potential for short-term dip buying, the overall outlook remains cautious, with risks skewed to the downside over the short to medium term.
Looking ahead, gold’s next major move is likely to be driven by a combination of inflation data, central bank expectations, and developments in the Middle East. While geopolitical uncertainty continues to provide an underlying layer of support, rising yields and a stronger US dollar may continue to limit upside potential unless safe-haven demand strengthens materially.
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