Gold prices turned down after a sharp increase, amid investors turning cautious as a ceasefire between the US and Iran still poses many risks.
The precious metal previously surpassed the $4,800 per ounce mark after information that US President Donald Trump and Iran reached a two-week ceasefire agreement to continue negotiations. However, the upward momentum quickly weakened as the market adjusted expectations about the prospect of conflict.
Mr. Brian Lan - CEO of a precious metal trading company - said that the gold market currently has no clear momentum, as investors are still monitoring developments after the ceasefire. He predicts that gold prices may fluctuate in the range of 4,607 - 4,860 USD per ounce in the short term.
From a strategic perspective, Mr. Ahmad Assiri - Strategist at Pepperstone Group Ltd. , the fact that gold prices exceeded the 4,800 USD mark mainly reflects a correction of short-term risk expectations, rather than a sustainable upward trend. The market is still discounting the uncertainties related to conflict.
Geopolitical developments continue to be the main dominant factor. Mr. Trump affirmed that he will maintain a military presence in the Middle East until an agreement with Iran is reached, and warned of the risk of escalation if conditions are not met. Meanwhile, Israel is increasing airstrikes in Lebanon, raising concerns that tensions could spread.
Pressure from the energy market has also not cooled down. Oil prices have rebounded due to concerns that supply from the Middle East cannot fully recover, especially when the possibility of maintaining a ceasefire is still open.
In the context of the conflict entering its sixth week, fluctuating energy prices continue to increase inflation risks, forcing the market to readjust expectations about monetary policy. The possibility of the US Federal Reserve (Fed) cutting interest rates this year is increasingly narrowed.
The minutes of the Fed's March meeting show that many policymakers are still concerned about inflation higher than target, while growth shows signs of slowing down. Inflation data to be released will play a key role in policy orientation in the coming time.
Gold prices have fallen more than 10% since the end of February, mainly due to pressure from high interest rates and profit-taking activities. However, some financial institutions still assess that the precious metal may recover in the medium term if geopolitical risks continue to persist.
In the short term, the market is likely to continue to fluctuate in a narrow range, depending on the developments of conflicts and global monetary policy signals.
