Gold prices fluctuated slightly after two consecutive increasing sessions as investors continued to monitor the deadlock in the Middle East conflict and developments on the Asian stock market ahead of the important US inflation report.
Spot gold traded around 4,726 USD/ounce after narrowing its previous gains. US President Donald Trump continued to criticize Iran's response to the peace proposal from Washington on Monday, saying that the fragile ceasefire in the Strait of Hormuz is currently only "very weak", showing that the conflict is unlikely to end soon.
On the stock market, Korean stocks – the group that led the region's recent gains – at one point fell more than 5% before partially recovering. This development appeared after a policymaker in South Korea mentioned the possibility of using tax revenue from the AI sector to pay "dividends" to people, before clarifying his statement again.
The gold market has experienced a period of strong fluctuations this year. Gold prices once reached a historical peak at the end of January before adjusting down again.
According to analysts, this precious metal has been under pressure since the Middle East conflict broke out due to sharply rising oil prices, raising concerns that central banks may maintain high interest rates or even raise interest rates to control inflation. This is a disadvantage for gold because this asset does not generate profits.
Mr. Christopher Wong - Strategist at Oversea-Chinese Banking Corp - said that the current diễn biến of gold prices reflects that the market is being affected simultaneously by many factors such as oil prices, inflation, Fed policy expectations, USD diễn biến and global risk sentiment.
Meanwhile, silver prices nearly went sideways after increasing by more than 7% in the previous session. The strong increase in silver appeared after information related to the liquidity issue of a state-owned oil and gas enterprise in Peru - one of the world's largest silver producers.
New statements from Mr. Trump about Iran appeared just before the US released an important inflation report on Tuesday.
Economists predict that the US consumer price index (CPI) may increase sharply as the conflict in the Middle East pushes energy prices up and creates a spillover effect on production and agriculture.
