Gold prices fell again after a slight recovery lasting two sessions, as conflicting statements from the US and Iran increased doubts about the prospect of achieving a solution to the conflict in the Middle East.
The precious metal once fell by 2%, below the 4,420 USD/ounce mark and almost wiped out the increase of the previous two sessions. While the White House affirmed that exchanges aimed at ending the conflict with Iran are underway, Tehran publicly rejected proposals from the US and offered its own conditions. In parallel with diplomatic efforts, the US still deploys thousands of more troops to the region, increasing concerns about the possibility of expanding its military presence.
Since the conflict began nearly a month ago, gold prices have fallen by more than 15%, mostly fluctuating in the same direction as the stock market and in the opposite direction to oil prices. The diễn biến of monetary policy in major economies, especially the US Federal Reserve (Fed), continues to be a significant factor affecting the trend of non-performing asset groups such as gold.
The Fed's policy outlook in the coming time is also being closely monitored by the market, in the context that some financial institutions on Wall Street have adjusted their US economic growth forecast for this year in a more cautious direction.
Oil prices rose in Thursday's trading session as the Iranian Parliament began considering a bill to impose fees on ships wishing to pass through the Strait of Hormuz – an important energy transport route that has been significantly disrupted since the outbreak of the conflict. Asian stock markets fell, ending a previous two-session rally.
According to Bloomberg calculations, about 85 tons of gold held in exchange-traded funds (ETFs) have been withdrawn since the conflict began. Standard Chartered Plc analysts, including Ms. Sudakshina Unnikrishnan, said that even at a price of about $4,500/ounce, there are still about 83 tons of gold in a loss-making state and may face the risk of further selling. The value is equivalent to about $12 billion on Wednesday's closing level.
Analysts believe that speculative holdings in the market may still continue to be under adjustment pressure in the short term.
Spot gold prices fell 1.5% to 4,443.74 USD/ounce at 2:29 PM Singapore time. Silver prices fell 1.8% to 69.90 USD/ounce, while platinum and palladium also fell. The Bloomberg Dollar Spot Index – a measure of the strength of the USD – remained almost flat.
