Gold prices remained around the 4,700 USD/ounce mark as inflation in the US rebounded, strengthening expectations that the US Federal Reserve (Fed) will continue to maintain high interest rates for a longer time.
This precious metal traded around 4,700 USD/ounce after falling 0.6% in the previous session. Data released on Wednesday showed that wholesale inflation in the US in April increased at the strongest rate since 2022, while the yield of 10-year US Treasury bonds continued to rise and approached the highest level since July.
High interest rates often put pressure on gold because this asset does not generate interest.
At the same time, the US Senate approved Mr. Kevin Warsh as Fed Chairman with a narrow margin. The market is currently closely monitoring the policy orientation of the Fed under the new term, especially in the context of debates surrounding the independence of the US central bank.
Concerns about the Fed's independence were once one of the factors supporting gold prices to rise sharply and set records in January.
Previously, data released on Tuesday showed that the US consumer price index (CPI) increased by 3.8% compared to the same period last year - the highest level since 2023.
According to the American Automobile Association (AAA), gasoline prices in the US have increased by about 50% since the Iran conflict broke out. The latest report from the US Bureau of Labor Statistics also shows that airfares, housing, clothing and food prices continue to rise.
Gold prices are currently fluctuating in a narrow range since they fell sharply in the early stages of the Iran conflict. The market is considering two main factors, including the risk of prolonged inflation causing interest rates to remain high and the risk of weakening economic growth if the conflict continues to drag on.
Mr. Nicholas Frappell - Global Organization Market Director at ABC Refinery said that the market is currently focusing on assessing the possibility of conflict in the Middle East cooling down and the Strait of Hormuz possibly returning to normal operation.
According to him, gold could be supported if the USD weakens and central banks reduce monetary policy tightening in the event that the Strait of Hormuz is completely reopened.
Meanwhile, silver prices continue to stand out in the precious metal market as they have increased by about 19% since the beginning of May.
Ms. Nicky Shiels – Head of Metal Research and Strategy at MKS PAMP SA believes that the increase in silver mainly comes from technical factors and speculation.
According to her, the recent sharp increase in copper prices and concerns about supply have contributed to pushing up silver prices because silver is often mined as a byproduct in the copper mining process.
She also said that silver, zinc and copper are currently signaling a fairly strong price increase in the market.
