Gold prices fell slightly in the trading session on June 18 when the market welcomed information that the US and Iran signed a temporary peace agreement, helping to ease concerns about the global energy crisis. However, the upward momentum of the precious metal is still limited by the prospect of high interest rates after the latest meeting of the US Federal Reserve (Fed).
Spot gold traded around 4,300 USD/ounce after falling 1.7% in the previous session. As of 10 am Vietnam time, gold price slightly decreased by 0.5% to 4,312.83 USD/ounce.
According to market information, US and Iranian officials completed the signing of a temporary peace agreement in electronic form on the evening of June 18. However, there has been no clear confirmation of whether transportation through the Strait of Hormuz has been fully restored or not.
This agreement is expected to contribute to reducing the global energy shock, a factor that once pushed oil prices up sharply and increased inflation concerns in recent months.
However, investors are still cautious as they are not clear about the cooling rate of fuel prices as well as the time needed for goods circulation through the Strait of Hormuz to return to normal before the conflict.
In the opposite direction, the Fed continued to put pressure on the gold market by maintaining its inflation control stance.
At the end of the June policy meeting, the Fed kept interest rates unchanged but signaled that it could continue to tighten monetary policy in the near future. At the same time, the Fed also removed the content mentioning the possibility of adjusting interest rates towards easing in its policy statement.
The market is currently assessing the possibility of the Fed raising interest rates in October this year.
High interest rates are often a disadvantageous factor for gold because precious metals do not bring yields, causing the opportunity cost of holding to increase.
Mr. Ryan McKay - Senior Commodity Strategist at TD Securities said that most of the Fed's interest rate hike expectation was reflected in gold prices before this meeting.
The general outlook still leans towards a negative trend for gold. For market sentiment to change significantly, a larger adjustment in the Fed's policy orientation needs to appear," he said.
On the other precious metals market, silver prices rose 1.35% to 68.82 USD/ounce after falling about 3% in the previous session. Platinum and palladium prices also simultaneously went up.
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 the pace of implementing the newly reached peace agreement. Although short-term pressure is still present, safe-haven demand and buying activities from central banks are expected to continue to play a role in supporting the gold market in the long term.
