Gold prices fell slightly in the sparse trading session at the beginning of the week, as concerns about inflation continued to cast a shadow over the prospects of US monetary policy, while the market waited for new developments from peace talks between the US and Iran.
Spot gold prices fell 0.5% to 4,575.05 USD/ounce at 3:00 PM Vietnam time. US gold futures for June delivery fell 0.9% to 4,600.60 USD/ounce.
Markets in China, Japan and the UK closed for holidays, causing transaction liquidity to decline.
US Federal Reserve (Fed) Chairman Jerome Powell ended his 8-year term last week with the decision to keep interest rates unchanged, amid growing concerns about inflation.
Mr. Tim Waterer - Market Analysis Director at KCM Trade commented: "Gold prices are still being affected by the Fed's'hawkish' message last week, especially objections to further policy easing.
Some Fed officials have opposed recent policy statements that the oil price shock from the Iranian conflict makes it impossible for the Fed to continue to lean towards interest rate cuts, and may even have to consider increasing borrowing costs in the future.
Rising oil prices may force central banks to maintain high interest rates for longer, thereby putting pressure on non-performing assets such as gold.
Oil prices have cooled down but remain above the 100 USD/barrel mark, in the context that the prospect of reaching a peace agreement between the US and Iran is still unclear.
US President Donald Trump said Washington will begin supporting the release of ships stranded in the Gulf area from the beginning of the week, while there is information that a tanker was attacked with an unidentified object in the Strait of Hormuz.
Iranian state media said that the US has responded to Tehran's 14-point peace proposal through Pakistan, and Iran is considering it.
Mr. Waterer said: "We forecast that gold prices will fluctuate in the 4,400–5,500 USD/ounce range by the end of the year. To reach the upper range, a sustainable cooldown of Middle East tensions and reduced inflation is needed. Conversely, if oil prices remain high, gold may be held in the lower half of this range.
On the precious metals market, spot silver prices fell 0.6% to $74.91/ounce, platinum remained flat at $1,989/ounce, while palladium fell 0.4% to $1,519.78/ounce.
