Gold prices continue to fluctuate around the 4,500 USD/ounce range as the market is under pressure from rising US bond yields, strengthening the USD and concerns that inflation has not cooled down as energy prices remain high.
In the latest trading session, spot gold prices at one point slightly recovered to around 4,500 USD/ounce, but in general still could not regain the important resistance level after a recent series of adjustments.
According to analysts, developments in the Middle East are still a major influencing factor for the global financial market. The Iranian conflict and disruption in the Strait of Hormuz continue to push oil prices to anchor in highs, thereby increasing inflationary pressure and strengthening expectations that interest rates will remain at a higher level for longer.
The yield of 10-year US Treasury bonds is currently maintained around its highest level in many years, while the USD is also rising again. These are factors that often disadvantage gold because the precious metal is not profitable and is valued in greenbacks.
Mr. Ole Hansen - Head of Commodity Strategy at Saxo Bank said that rising oil prices are creating a more difficult environment for gold in the short term.
High energy prices increase concerns about inflation, pulling bond yields and the USD up. This puts pressure on gold even though defense demand is still present," he said.
However, many international financial institutions still maintain a positive view of gold's long-term prospects as the need to hold safe assets is still maintained in the context of global economic and geopolitical volatility.
Mr. Kiran Kowshik - Global Foreign Exchange Strategist at Lombard Odier - believes that the current correction has not changed the long-term trend of the gold market.
According to him, the demand for buying gold from central banks along with the trend of diversifying reserve assets is still playing an important supporting foundation for gold prices.
The long-term support base of gold has not changed. Current corrections mainly reflect short-term fluctuations of yields and the USD," he said.
Lombard Odier currently maintains the gold price target of 5,400 USD/ounce for the next 12 months.
In the short term, investors continue to monitor US bond yields, oil prices and signals related to the Middle East conflict to assess the next trend of the gold market.
