World gold prices fell slightly in the last trading session of the week as investors continued to assess the impact of tensions between the US and Iran, while waiting for further signals about the monetary policy outlook of the US Federal Reserve (Fed) after the minutes of the June meeting.
As of 2:17 PM Vietnam time, spot gold prices fell 0.52% to 4,110.52 USD/ounce, while August gold futures fell 0.44% to 4,122.60 USD/ounce.
Market sentiment continues to be affected by developments in the Middle East. According to a US official, negotiations between Washington and Tehran are still being maintained even though the two sides have just launched new airstrikes and the US has re-imposed sanctions on Iran's oil exports.
These developments increase concerns about the risk of disruption of energy transportation through the Strait of Hormuz, although maritime operations have not yet been blocked.
The minutes of the Fed's monetary policy meeting on June 16-17 show that some policymakers still believe there is a basis to continue raising interest rates if inflationary pressure persists. According to the CME FedWatch tool, the market currently assesses about 63% of the Fed's ability to raise interest rates in the September meeting, up from about 54% a week earlier.
Mr. Tim Waterer - Head of Market Analysis at KCM Trade - said that gold prices are in an accumulation phase after a recent recovery when investors are still cautious about instability related to US-Iran relations.
According to Mr. Waterer, gold may continue to attract buying power when adjusted if oil prices remain around the current level. However, if oil prices rise sharply again, inflationary pressure and expectations of the Fed raising interest rates will increase, thereby adversely affecting the precious metal.
In the opposite direction, the fact that Brent oil prices fell below 76 USD/barrel, while WTI oil retreated to around 71 USD/barrel, has somewhat cooled down inflationary pressure. The yield of 10-year US government bonds also fell to about 4.53%, the yield of 2-year bonds fell to 4.16%, while the USD index fell below the 101 point mark, creating conditions for gold to recover.
In the short term, the market will focus on the US consumer price index (CPI) expected to be released next week, along with a hearing before Congress by Fed Chairman Kevin Warsh. A lower-than-expected inflation report could reduce the possibility of the Fed raising interest rates in September and create conditions for gold prices to retest the 4,162-142 USD/ounce resistance zone. Conversely, if energy prices rise sharply again and inflation continues to heat up, pressure on the gold market may increase.
