Gold prices reversed to decrease in the trading session on June 18 when oil prices fell sharply after positive signals from the temporary agreement between the US and Iran, thereby easing concerns about inflation and supporting precious metals to regain some of the gains lost after the meeting of the US Federal Reserve (Fed).
As of 2:05 PM Vietnam time, spot gold prices fell 1.31% to 4,304.08 USD/ounce. Previously, the precious metal had fallen 1.7% in the previous session after the Fed signaled that it could raise interest rates by the end of this year.
Gold futures for August delivery fell 1.37% to $4.321.25/ounce.
Mr. Kelvin Wong - Senior Market Analyst at OANDA said that the current recovery momentum mainly comes from closing selling positions after a sharp decrease in the previous session.
This is partly a buy-and-sell activity. One of the reasons driving this process is the positive information from the Middle East that caused oil prices to fall sharply," Mr. Wong said.
Oil prices fell after the US and Iran announced the details of the temporary agreement on June 17. The agreement includes 14 clauses, extending the 60-day suspension of confrontational activities for the two sides to continue negotiations towards a final agreement.
This development helps the market reduce concerns about the risk of disruption of global energy supply, thereby reducing inflationary pressure.
Usually, rising oil prices will increase inflation expectations and lead to the possibility that central banks will maintain high interest rates for longer. This is detrimental to gold because the precious metal does not yield yields.
However, although gold prices recover in the short term, the upward outlook still faces many challenges.
I think gold's upward momentum will be quite limited because the market has already valued the possibility of the Fed starting a new interest rate hike cycle," Mr. Wong said.
According to forecasts released by the Fed after the latest policy meeting, 9 out of 19 policymakers believe that interest rates need to be raised further this year.
The Fed decided to keep interest rates unchanged in the 3.50% - 3.75% range at its first meeting chaired by Chairman Kevin Warsh. However, the signals given show that the US central bank is still particularly cautious about the risk of inflation.
According to CME's FedWatch tool, the market is currently assessing the probability of the Fed raising interest rates in December to 85%, a sharp increase compared to 61% before the meeting.
On other precious metals markets, spot silver prices rose 1.36% to $68.83/ounce. Platinum prices rose 0.9% to $1,752.45/ounce, while palladium rose 1.3% to $1,329.64/ounce.
Experts believe that in the short term, the diễn biến of gold prices will continue to depend on the Fed's interest rate expectations, oil price trends and global inflation outlook. Although it has recovered from a recent low, the precious metal still needs strong enough supporting factors to form a sustainable upward trend.
